When several persons wish to cooperate in pursuit of a common objective, most people automatically think of some form of business association, such as a limited liability company or a limited partnership. Hungarian civil law, however, also recognises a much simpler structure: the civil law partnership.<\/p>\n
A civil law partnership is a form of cooperation that enables several persons to jointly pursue an economic or other objective without establishing a separate organisation or legal person for that purpose.<\/p>\n
The Civil Law Partnership Is Not a Legal Person<\/strong><\/p>\n One of the most important characteristics of a civil law partnership is that it does not have legal personality. While a business association appears in legal relations as an independent legal subject, a civil law partnership does not become a person separate from its members.<\/p>\n In practice, this means that:<\/p>\n <\/p>\n A civil law partnership is therefore not actually an organisation, but rather a contractual cooperation between its members.<\/p>\n How Is a Civil Law Partnership Created?<\/strong><\/p>\n The answer is simple: by contract. But the more interesting question is: how can that contract be formed?<\/p>\n The parties, or members, undertake to cooperate in order to achieve their common objective, to provide the asset contributions necessary for achieving that common objective, and to jointly bear the risks of their activities.<\/p>\n No official authorisation or registration is required for its creation. In the case of a civil law partnership agreement, the Civil Code does not prescribe any mandatory formal requirements, meaning that the agreement may be concluded not only in writing, but also orally.<\/p>\n Moreover, in certain cases, the existence of a civil law partnership may also be established on the basis of the parties\u2019 implied conduct. According to judicial practice, what matters is not necessarily the name the parties give to their cooperation, but the actual substance of their cooperation.<\/p>\n This is well illustrated by BH (Judgement) 1978.<\/strong> 118.<\/strong>, according to which:<\/p>\n \u201cWhere construction work is carried out jointly by parents and their child, or by close relatives, if there is a common intention between them to acquire property jointly and the necessary financial resources have been made available for joint disposal, there may be a legal possibility to establish the creation of a civil law partnership under Section 571 of the Civil Code.\u201d<\/p>\n The decision clearly shows that, in certain cases, parties may become members of a civil law partnership even without expressly having intended to do so. If the common objective, the cooperation, the joint assumption of risk, and the statutory conditions can be established, the legal relationship may come into existence.<\/p>\n What Qualifies as an Asset Contribution?<\/strong><\/p>\n A key element of a civil law partnership is the provision of an asset contribution.<\/p>\n The contribution provided by a member may be:<\/p>\n <\/p>\n The value of non-cash asset contributions is determined by the members themselves, and the relative proportion of the contributions is established on that basis.<\/p>\n As regards the fate of the contribution, a distinction must be made between consumable and non-consumable items. Non-consumable items, such as a motor vehicle or machinery, are, as a general rule, placed into the joint use of the members.<\/p>\n Consumable items, however, such as food, fuel, or certain raw materials, become the joint property of the members.<\/p>\n Who Makes the Decisions?<\/strong><\/p>\n Since a civil law partnership does not have an independent organisation, decision-making is essentially in the hands of the members.<\/p>\n As a general rule, all members are jointly entitled to conduct the affairs of the partnership. The parties may, however, also agree to appoint one or more specified members to handle management.<\/p>\n If several persons are entitled to conduct the affairs of the partnership, decisions are, as a general rule, made unanimously.<\/p>\n An important characteristic is that a person outside the partnership may not be authorised to conduct its affairs, unlike in the vast majority of companies, where this is otherwise possible.<\/p>\n Can the Membership Position Be Transferred?<\/strong><\/p>\n A civil law partnership is based on a personal relationship of trust. Members typically decide to cooperate with each other in view of each other\u2019s identity, and therefore the membership relationship cannot be regarded as a freely transferable property right.<\/p>\n Accordingly, as a general rule, the membership position cannot be freely transferred to a third party. A new person may enter the legal relationship only with the consent of the other members.<\/p>\n A civil law partnership therefore differs significantly from business associations, where the transfer of certain equity interests or business quotas \u2014 although not necessarily easily \u2014 is more likely to take place.<\/p>\n When Does a Civil Law Partnership Terminate?<\/strong><\/p>\n A civil law partnership may terminate for several reasons.<\/p>\n Termination may result, in particular, from:<\/p>\n <\/p>\n In the latter cases, the remaining members may decide to keep the partnership agreement in force without the departing member. The logic behind the regulation is that a civil law partnership is a contractual relationship based on personal trust, which the parties establish in view of each other\u2019s identity.<\/p>\n Settlement Following Termination<\/strong><\/p>\n The termination of the partnership does not mean that the parties may simply walk away from each other. Under the law, the members are obliged to settle accounts with one another, and any prior exclusion of such settlement is null and void.<\/p>\n In the course of the settlement:<\/p>\n <\/p>\n Resumen<\/strong><\/p>\n The civil law partnership is one of the simplest forms of cooperation in Hungarian private law. It is not a legal person, it is not subject to registration, and in many cases even a written agreement is not required for its creation. At the same time, its flexibility can easily be misleading: under certain circumstances, the parties may, even unintentionally, establish a form of cooperation that the law qualifies as a civil law partnership.<\/p>\n For this reason, it is worth being familiar with the rules of this structure, particularly in relation to asset contributions, decision-making, termination, and settlement, before entering into cooperation with others in pursuit of a common objective.<\/p>\n \n When several persons wish to cooperate in pursuit of a common objective, most people automatically think of some form of business association, such as a limited liability company or a limited partnership. Hungarian civil law, however, also recognises a much simpler structure: the civil law partnership. A civil law partnership is a form of cooperation […]<\/p>\n","protected":false},"author":29,"featured_media":56207,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[15],"tags":[],"class_list":["post-56206","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"acf":[],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\t\n
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