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Complete Home and Office Legal Guide (Chestnut) (1993).ISO
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1992-12-17
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/* 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