Short answer. Article 1770 requires a partnership to have a lawful object. An unlawful partnership can be dissolved by judicial decree, and once that happens, its profits are confiscated in favor of the State, without prejudice to the Penal Code's rules on confiscating the instruments and effects of a crime.
What the law says
A partnership must have a lawful object or purpose, and must be established for the common benefit or interest of the partners. When an unlawful partnership is dissolved by a judicial decree, the profits shall be confiscated in favor of the State, without prejudice to the provisions of the Penal Code governing the confiscation of the instruments and effects of a crime.
Civil Code, Article 1770 — Lawful Object. Read the full provision →
A lawful object is a basic requirement, not a formality
Article 1770 opens with the requirement itself: a partnership must have a lawful object or purpose, and must be established for the common benefit or interest of the partners. This is not a technicality that can be waived by agreement among the partners; it is a basic condition for the partnership to be a legitimate one in the eyes of the law. A partnership organized around an illegal purpose does not become valid simply because the partners genuinely intended to work together and share in the results.
Judicial dissolution and confiscation of profits
The article addresses directly what happens once the illegality is confirmed through the courts: when an unlawful partnership is dissolved by a judicial decree, the profits shall be confiscated in favor of the State. So an unlawful partnership is not simply left to wind up its affairs and distribute whatever profits it made among the partners as though nothing were wrong. The profits generated by the unlawful venture go to the State instead, reflecting that the law will not let partners keep the benefit of a partnership organized around an illegal object.
This is separate from criminal confiscation rules
The article also clarifies that this confiscation of profits is without prejudice to the provisions of the Penal Code governing the confiscation of the instruments and effects of a crime. In other words, the civil consequence under Article 1770, losing the partnership's profits to the State upon judicial dissolution, does not replace or limit whatever separate confiscation the Penal Code may impose on instruments or effects connected to a crime. Both sets of rules can apply, depending on what exactly the partnership's illegal activity involved.
What this means for a partnership with an illegal purpose
If your partnership's actual purpose turns out to be unlawful, it faces judicial dissolution rather than simply continuing or being wound up informally by the partners themselves. Once a court dissolves it as an unlawful partnership, the profits it generated are subject to confiscation in favor of the State rather than distribution among the partners, and the underlying conduct that made the purpose illegal may separately expose the partners to consequences under the Penal Code, depending on the nature of what the partnership was actually doing.