Article in legal blog by attorney-at-law Siret Siilbek about the civil law partnership in building field

In 2015 December´s legal blog article the partner and attorney-at-law Siret Siilbek wrote about how building companies often participate in business as civil law partnership partners.

Siret wrote, that civil law partnership is common for example in public procurement contracts, where economical and professional competence is assured by economical indicators of several companies. Often the civil law partnership (consortium) relationship is not regulated and also the principles of law are not acknowledged. Not knowing them, may cause significant problems later.

Civil law partnership is an association created by different people to achieve the common goal, that is not a separate corporate body. According to Law of Obligations Act, two or more persons (the partners) are obliged to act to achieve the common goal, by contributing the way that is determined in the contract, foremost by making contributions.

Important is to bear in mind, that the partners are jointly and severally liable for the obligations taken by this partnership. Therefore, the partner has to be ready to fulfil all the joint obligations in front of creditors by itself. It is important, that in case of acting as a consortium, the principles of sharing the profit and covering the loss, would be thought and discussed through.

Siret brought out the situations in practice, where the loss has been left to one and the profit to another partner, as a result of the inconsiderate relationship of the partners, that needless to say, affects congruously energizingly or devastatingly one or another partner´s economical indicators as well.

Siret accentuated, that in addition to disposal of the assets/obligations, it is of course, important to regulate one or another partner´s contribution to the partnership, because according to the law, these are assumed to be equal. If it actually is not so, it should be fixated. The amount of the contribution is extremely important during liquidation in case the partnership ends, because during the liquidation the contribution will be returned (thereat the compensation must not be paid for the contribution which consisted of provision of services and giving an object in use) and the profit or loss will be divided proportionally to the contribution. If it is not clear, which was one or another partner´s contribution, the disputes are easy to arise.

The blog’s post is available here: http://www.addenda.ee/vandeadvokaat-siret-siilbek-seltsing

For further information related to the article, please contact Siret by e-mail siret@alternalaw.ee or by phone +372 680 6850.

Law Firm ALTERNA