IV. PROBLEMS. Apply the laws on partnership to explain your answer? (10 pts.)

1. Lando, Landis and Landa are college students and they jokingly misrepresented themselves as real estate brokers and partners in Triple-Land & Co. (TLC). They approached Kristian who is desperate to buy a house and lot and told him that a downpayment of P100,000 will solve his problem. Convinced that the three are partners and the TLC is a valid partnership, Kristian gave them the money in cash. It was only later that Kristian discovered that the three are just college students and he was defrauded by them. He filed a case of collection and damages against TLC in court. The three students countered that TLC does not exist and so the case should be dismissed. If you are the judge, how will you resolve it? Explain your answer. (5 pts.)

1. X, Y & Z created a partnership with a fixed term to end on June 1, 2019 but the partnership continue with its operation. OnJune 10, 2019, X suffered from serious insanity and he was no longer of sound mind. Y, having no knowledge of the insanity of X, sold a partnership property, a two (2) hectare prime lot in partnership's name to Andrew in order to pay liability to Bryan, a partnership creditor. The sale was executed on June 5, 2019. Later, Z moved to rescind the contract of sale for the reason that he is not bound by it and Andrew shall get only the equitable interest of Y.

1^st Conclusion: A new partnership is formed after the end of the fixed term which became a partnership at will which also ended after the insanity of X. The act of Y will however bind the partnership for he did know about the insanity of X prior to the sale and he is acting as a liquidating partner to settle all partnership assets.

2^nd Conclusion: The rescission of the contract by Z is valid because the sale made by Y is no longer valid by reason of the insanity of X. There is no longer a partnership after X became insane. The act of Y in selling the property should have been made withthe conformity of Z.

1. Both conclusions are correct.
2. Both conclusions are wrong.
3. 1^st conclusion wrong, 2^nd conclusion correct

3.1^st conclusion correct, 2^nd conclusion wrong

Explain your answer. (5 pts.)