Short answer. Not without the others' agreement. Article 1808 bars a capitalist partner from engaging for his own account in any operation of the kind of business the partnership is engaged in, unless there is a stipulation to the contrary. The remedy for breaking it is deliberately one-sided.
What the law says
The capitalist partners cannot engage for their own account in any operation which is of the kind of business in which the partnership is engaged, unless there is a stipulation to the contrary.
Civil Code, Article 1808 — Capitalist Partner's Competition. Read the full provision →
What the law says
Any capitalist partner violating this prohibition shall bring to the common funds any profits accruing to him from his transactions, and shall personally bear all the losses.
Civil Code, Article 1808 — Capitalist Partner's Competition. Read the full provision →
The prohibition, and its lopsided sanction
The rule is stated plainly: The capitalist partners cannot engage for their own account in any operation which is of the kind of business in which the partnership is engaged, unless there is a stipulation to the contrary. What gives it teeth is the sentence that follows. The offending partner shall bring to the common funds any profits accruing to him from his transactions, and shall personally bear all the losses. The partnership takes the upside and he keeps the downside. That asymmetry is intentional; it removes any calculation in which competing quietly could still pay.
How far the ban reaches
It is tied to the kind of business the partnership actually conducts, not to business generally. A capitalist partner in a printing firm may invest in a restaurant without engaging this article at all. The harder cases are adjacent lines and the same line served to different customers, where the honest test is whether the venture competes for the partnership's opportunities. Note also that the prohibition binds capitalist partners. Article 1789 treats an industrial partner more strictly still, barring him from engaging in business for himself at all unless the partnership expressly permits it.
The wider duty behind it
Article 1808 is one application of a broader obligation. Under Article 1807 every partner must account to the partnership for any benefit, and hold as trustee for it any profits derived by him without the consent of the other partners from any transaction connected with the formation, conduct or liquidation of the partnership, or from any use by him of its property. So a side venture that does not compete may still be caught if it was built on the partnership's contacts, staff or equipment. Article 1806 requires partners to render true and full information on demand about anything affecting the partnership.
What to do about it
Check the partnership agreement first, because a stipulation to the contrary is exactly what Article 1808 allows and many agreements contain one, sometimes narrower than the partner remembers. If there is none, Article 1809 gives any partner the right to a formal account where circumstances render it just and reasonable, and that is the mechanism for getting at the side business's figures. Where the conduct has made the partnership unworkable, Article 1831 lets a court decree dissolution on grounds including conduct that tends to affect the business prejudicially.
Related provisions
- Civil Code, Article 1808 — Capitalist Partner's Competition
- Civil Code, Article 1789 — Industrial Partner's Exclusivity
- Civil Code, Article 1807 — Partner as Trustee of Benefits
- Civil Code, Article 1809 — Right to a Formal Account