/* We continue with the Uniform Partnership Act in full text. */

PART VI

DISSOLUTION AND WINDING UP

Section 29. Dissolution Defined. The dissolution of the

partnership is the change in the relation of the partners caused

by any partner ceasing to be associated in the carrying on as

distinguished from the winding up of the business.

Section 30. Partnership Not Terminated by Dissolution. On

dissolution the partnership is not terminated, but continues

until the winding up of partnership affairs is completed.

Section 31. Causes of dissolution. Dissolution is caused:

(1) Without violation of the agreement of the partners:

(a) By the termination of the definite term or particular

undertaking specified in the agreement,

(b) By the express will of any partner when no definite term

or particular undertaking is specified,

(c) By the express will of all the partners who have not

assigned their interest or suffered them to be charged for their

separate debts,

(d) By the expulsion of any partner from the business bona

fide in accordance with such a power conferred by the agreement

among the partners;

/* Note that although this is not made clear this contemplates a

WRITTEN agreement between the partners. */

(2) In contravention of the agreement between the partners,

where the circumstances do not permit a dissolution under any

other provision of this section, by the express will of any

partner at any time;

(3) By any event which makes it unlawful for the business of

the partnership to be carried on or for the members to carry it

on in partnership;

(4) By the death of any partner;

(5) By the bankruptcy of any partner or the partnership;

(6) By decree of the court under section 32.

Section 32. Dissolution by Decree of Court. (1) On application by

or for a partner the court shall decree a dissolution whenever:

(a) A partner has been declared a lunatic in any judicial

proceeding or is shown to be of unsound mind,

(b) A partner becomes in any other way incapable of

performing his part of the partnership contract,

(c) A partner has been guilty of such conduct as tend to

affect prejudicially the carrying on of the business,

(d) A partner willfully or persistently commits a breach of

a partnership agreement, or otherwise so conducts himself, in

matters relating to the partnership business that it is not

reasonably practicable to carry on the business in partnership

with him,

(e) The business of the partnership can only be carried on

at a loss,

(f) Other circumstances render a dissolution equitable.

(2) On the application of the purchaser of a partner's

interest under sections 27 or 28.

Section 33. General Effect of Dissolution on Authority of

Partner. Except so far as may be necessary to wind up partnership

affairs or to complete transactions begun but not then finished,

dissolution terminates all authority of any partner to act for

the partnership,

(1) Except with respect to the partners,

(a) When the dissolution is not by the act, bankruptcy

or death of a partner; or

(b) When the dissolution is by such act, bankruptcy or

death of a partner, in cases where section 34 so applies.

(2) With respect to persons not partners, as declared in

section 35.

Section 34. Right of Partner to Contribution From Co-Partners

After Dissolution. Where the dissolution is caused by the act,

death or bankruptcy of a partner, each partner is liable to his

co-partners for his share of any liability created by any partner

acting for the partnership as if the partnership had not been

dissolved unless:

(a) The dissolution being by act of any partner, the partner

acting for the partnership had knowledge of the dissolution, or

(b) The dissolution being by the death or bankruptcy of a

partner, the partner acting for the partnership had knowledge or

notice of the death or bankruptcy.

Section 35. Power of Partner to Bind Partnership to Third Persons

After Dissolution. (1) After dissolution a partner can bind the

partnership except as provided in paragraph (3)

(a) By any act appropriate for winding up partnership

affairs or completion transactions unfinished at dissolution;

(b) By any transaction which would bind the partnership if

dissolution had not taken place, provided the other party to the

transaction:

(I) Had extended credit to the partnership prior to

dissolution and had no knowledge or notice of the dissolution; or

(II) Though he had not so extended credit, had nevertheless

known of the partnership prior to dissolution and had no

knowledge or notice of dissolution, the fact of dissolution had

not been advertised in a newspaper of general circulation in the

place (or in each place if more than one) at which the

partnership business was regularly carried on.

(2) The liability of a partner under paragraph (1)(b) shall

be satisfied out of partnership assets alone when such partner

had been prior to dissolution:

(a) unknown as a partner to the person with whom the

contract was made; and

(b) So far unknown and inactive in partnership affairs that

the business reputation could not be said to have been in any

degree due to his connection with it.

(3) The partnership is in no case bound by any act of a

partner after dissolution:

(a) where the partnership is dissolved because it is

unlawful to carry on the business, unless the act is appropriate

for winding up partnership affairs; or

(b) Where the partner has become bankrupt; or

(c) Where the partner has no authority to wind up

partnership affairs; except by a transaction by one who:

(I) Had extended credit to the partnership prior to

dissolution, and, having no knowledge or notice of want of his

authority, the fact of his want of authority has not been

advertised in the manner provided for advertising the fact of

dissolution in paragraph (1)(b)(II).

(4) Nothing in this section shall affect the liability under

section 16 of any person who after dissolution represents himself

or consents to another representing him as a partner in a

partnership engaged in carrying on business.

Section 36. Effect of dissolution on Partner's Existing

Liability. (1) The dissolution of the partnership does not of

itself discharge the existing liability of a partner.

(2) A partner is discharged from any existing liability upon

dissolution of the partnership by an agreement to that effect

between himself, the partnership creditor and the person or

partnership continuing the business; and such agreement may be

inferred from the course of dealing between the creditor having

the knowledge of the dissolution and the person or partnership

continuing the business.

(3) Where a person agrees to assume the existing obligations

of a dissolved partnership, the partners whose obligations have

been assumed shall be discharged from any liability to any

creditor of the partnership who, knowing of the agreement,

consents to a material alteration in the nature of time of

payment of such obligations.

(4) The individual property of a deceased partner shall be

liable for all obligations incurred while he was a partner but

subject to the prior payment of his separate debts.

Section 37. Right to Wind Up. Unless otherwise agreed the

partners who have not wrongfully dissolved the partnership or the

legal representative of the last surviving partner, not bankrupt,

has the right to wind up partnership affairs; provided, however,

that any partner, his legal representative or his assignee, upon

cause shown, may obtain winding up by the court.

Section 38. Rights of Partners to Application of Partnership

Property. (1) When dissolution is caused in any way, except in

contravention of the partnership agreement, each partner as

against his co-partners and all person claiming through them in

respect of their interests in the partnership, unless otherwise

agreed, may have the partnership property applied to discharge

its liabilities, and the surplus applied to pay in cash the net

amount owing to the respective partners. But if dissolution is

caused by expulsion of a partner, bona fide under the partnership

agreement and if the expelled partner is discharged from all

partnership liabilities, either by payment or agreement under

section 36(2), he shall receive in cash only the net amount due

him from the partnership.

(2) When dissolution is caused in contravention of the

partnership agreement the rights of the partners shall be as

follows:

(a) Each partner who has not caused dissolution wrongfully

shall have

(1) all the rights specified in paragraph (1) of this

section, and

(II) the right, as against each partner who has caused the

dissolution wrongfully, to damages for breach of the agreement.

(b) The partners who have not caused the dissolution

wrongfully, if they all desire to continue the business in the

same name, of the partnership, either by themselves or jointly

with others, may do so, during the agreed term for the

partnership and for that purpose may possess the partnership

property, provided they secure the payment by bond approved by

the court, or pay to any partner who has caused the dissolution

of the partnership wrongfully, the value of his interest in the

partnership at the dissolution, less any damages recoverable

under clause (2)(a)(II) of this section, and in like manner

indemnify him against all present or future partnership

liabilities.

(c) A partner who has caused the dissolution wrongfully

shall have:

(I) If the business is not continued under the provisions of

paragraph 2(b) all the rights of a partner under paragraph 91),

subject to clause (2)(a)(II) of this section,

(II) If the business is continued under paragraph (2)(b) of

this section the right as against his co-partners and all

claiming through them in respect of their interests in the

partnership, to have the value of his interest in the

partnership, less any damages caused to his co-partners by the

dissolution, ascertained and paid to him in cash, or the payment

secured by bond approved by the court, and to be released from

all existing liabilities of the partnership, but in ascertaining

the value of the partner's interest the value of good-will of the

business shall not be considered.

Section 39. Rights Where Partnership is Dissolved for Fraud or

Misrepresentation. Where a partnership contract is rescinded on

the ground of the fraud or misrepresentation of one of the

parties thereto, the party entitled to rescind is, without

prejudice to any other right, entitled:

(a) To a lien on, or right of retention of, the surplus of

the partnership property after satisfying the partnership

liabilities to third persons for any sum of money paid by him for

the purchase of an interest of the partnership and for any

capital or advances contributed by him; and

(b) To stand, after all liabilities to third persons have

been satisfied, in the pace of the creditors of the partnership

for any payments made by him in respect to partnership

liabilities; and

(c) To be indemnified by the person guilty of the fraud or

making the representation against all debts and liabilities of

the partnership.

Section 40. Rules for Distribution. In settling accounts between

the partners after dissolution, the following rules shall be

observed, subject to any agreement to the contrary:

(a) The assets of the partnership are:

(I) The partnership property,

(II) The contributions of the partners necessary for the

payment of all the liabilities specified in clause (b) of this

paragraph.

(b) The liabilities of the partnership shall rank in order

of payment, as follows:

(I) Those owing to creditors other than partners,

(II) Those owing to partners other than for capital and

profits,

(III) Those owing to partners in respect to capital,

(IV) Those owing to partners in respect to profits.

(c) The assets shall be applied in the order of their

declaration in clause (a) of this paragraph to the satisfaction

of the liabilities.

(d) The partners shall contribute, as provided by Section

18, (a) the amount necessary to satisfy the liabilities; but, if

any, but not all, of the partners are insolvent, or, not being

subject to process, refuse to contribute, the other partners

shall contribute their share of the liabilities, and, in the

relate proportions in which they share the profits, the

additional amount necessary to pay the liabilities.

(e) As assignee for the benefit of creditors or any person

appointed by the court shall have the right to enforce the

contributions specified in clause (d) of this paragraph.

(f) Any partner or his legal representative shall have the

right to enforce the contributions specified in clause (d) of

this paragraph.

(g) The individual property of a deceased partner shall be

liable for the contributions specified in clause (d) of this

paragraph.

(h) When partnership property and the individual properties

of the partners are in possession of a court for distribution,

partnership creditors shall have priority on partnership property

and separate creditors on individual property, saving the rights

of lien or secured creditors as heretofore.

(i) Where a partner has become bankrupt or his estate is

insolvent the claims against his personal property shall rank in

the following order:

(I) Those owing to separate creditors,

(II) Those owing to partnership creditors,

(III) Those owing to partners by way of contribution.

Section 41. Liability of Persons Continuing the Business in

Certain Cases. (1) When any new partner is admitted into an

existing partnership, or when any partner retires and assigns (or

the representative of the deceased partner assigns) his rights in

the partnership property to two or more of the partners, or to

one or more of the partners and one or more of third persons, if

the business is continued without liquidation of the partnership

affairs, creditors of the first or dissolved partnership are also

creditors of the partnership so continuing the business.

(2) When all but one partner retire and assign (or the

representative of a deceased partner assigns) their rights in

partnership property to the remaining partner, who continues the

business without liquidation of partnership affairs, either alone

or with others, creditors of the dissolved partnership are also

creditors of the person or partnership so continuing the

business.

(3) When any partner retires or dies and the business of the

dissolved partnership is so continued as set forth in paragraphs

(1) and (2) of this section with the consent of the retired

partners or the representative of the deceased partner, but

without any assignment of his rights in partnership property,

rights of creditors of the dissolved partnership and of the

creditors of the person or partnership continuing the business

shall be as if such assignment had been made.

(4) When all partners or their representatives assign their

rights in partnership property to one or more third persons who

promise to pay the debts and who continue the business of the

dissolved partnership, creditors of the dissolved partnership are

also creditors of the person or partnership continuing the

business.

(5) When any partner wrongfully causes a dissolution and the

remaining partners continue the business under the provisions of

section 38(2)(b), either alone or with others, and without

liquidation of the partnership affairs, creditors of the

dissolved partnership are also creditors of the person or

partnership continuing the business.

(6) When a partner is expelled and the remaining partners

continue the business either alone or with others, without

liquidation of the partnership affairs, creditors of the

dissolved partnership are also creditors of the person or

partnership continuing the business.

(7) The liability of a third person becoming a partner in

the partnership continuing the business, under this section, to

the creditors of the dissolved partnership shall be satisfied out

of partnership property only.

(8) When the business of a partnership after dissolution is

continued under any conditions set forth in this section the

creditors of the dissolved partnership, as against the separate

creditors of the retiring or deceased partner, or the

representative of the deceased partner, have a prior right to any

claim of the retired partner or partnership continuing the

business, on account of the retired or deceased partner's

interest in the dissolved partnership or on account of any

consideration promised for such interest or his right in

partnership property.

(9) Nothing in this section shall be held to modify any

right of creditors to set aside any assignment on the ground of

fraud.

(10) The use by the person or partnership continuing the

business of the partnership name, or the name of a deceased

partner as part thereof, shall not of itself make the individual

property of the deceased partner liable for any dents contracted

by such person or partnership.

Section 42. Rights of retiring of Estate of Deceased Partner When

the Business is Continued. When any partner retires or dies, and

the business is continued under any of the conditions set forth

in section 41, paragraphs (1), (2), (3), (5), (6) or section 38,

paragraph (2)(b) without any settlement of the accounts as

between him or his estate and the person or partnership

continuing the business, unless otherwise agreed, he or his legal

representative as against such persons or partnership may have

the value of his interest at the date of dissolution ascertained,

and shall receive as an ordinary creditor an amount equal to the

value of his interest in the dissolved partnership with interest,

or, at his option or at the option of his legal representative,

in lieu of interest, the profits attributable to the use of his

rights in the property of the dissolved partnership; provided

that the creditors of the dissolved partnership as against the

separate creditors, or the representative of the retired or

deceased partner, shall have priority on any claim arising out of

this section, as provided by Section 48, paragraph (8) of this

Act.

Section 43. Accrual of Actions. The right to an account of his

interest shall accrue to any partner, his legal representative,

as against the winding up partners or the surviving partners or

the person or partnership continuing the business, at the date of

dissolution, in the absence of any agreement to the contrary.

/* A separate section also specifies the effective date and the

repeal of laws in conflict with this statute. As of the date of

this update, all states had adopted this law, but, some made

minor revisions. Consult the state in questions official text for

variations. */