PC-SIG: Essential Home & Business/PC-SIG - Essential Home and Business Collection.iso/25/3/9/LHARC1.EXE/PART_2.STB

Text File | 1991-04-22 | 20KB | 440 lines

/* 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 th4e
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 th 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. */