Dissolution and Winding Up in Partnerships
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Questions and Answers

If a partner engages in a transaction after dissolution, in what circumstances can they bind the partnership?

  • If the other party to the transaction had no knowledge or notice of the dissolution. (correct)
  • If the fact of dissolution had been advertised in a newspaper.
  • If the other party had extended credit to the partnership prior to dissolution.
  • If the dissolution had been carried out due to financial difficulties.

    • Under what condition can a partner's liability from post-dissolution transactions be satisfied only from partnership assets?

  • When the partner was well-known in the business community.
  • When the partner was inactive in partnership affairs. (correct)
  • When the partner's connection with the partnership was well-advertised.
  • When the dissolution was due to legal reasons.

    • What must happen for a partner to bind the partnership through a transaction after dissolution?

  • The transaction must be unrelated to partnership business.
  • The partner must have known about the dissolution.
  • The other party must have extended credit to the partnership before dissolution. (correct)
  • The dissolution must have been announced in a local newspaper.

    • In which case can a partner's liability be satisfied from partnership assets alone post-dissolution?

    <p>If the partner was unknown and inactive in partnership affairs.</p> Signup and view all the answers

    What is required for a partner to bind the partnership through a transaction after dissolution without affecting their liability?

    <p>The other party must not have known about the dissolution.</p> Signup and view all the answers

    When can a partner's liability be satisfied solely from partnership assets after dissolution?

    <p>When the partner had no knowledge of the dissolution.</p> Signup and view all the answers

    In which scenario can a partner bind the partnership after dissolution with limited personal liability?

    <p>If they were unknown and inactive in partnership matters.</p> Signup and view all the answers

    Study Notes

    Dissolution and Winding Up of Partnership

    • Dissolution of a partnership refers to a change in the relation of partners caused by any partner ceasing to be associated in the carrying on of the business.
    • Winding up refers to the process of settling the business or partnership affairs after dissolution.
    • Termination occurs when all partnership affairs are completely wound up and finally settled, marking the end of the partnership life.

    Effects of Dissolution

    • Dissolution does not terminate the partnership, but rather the partnership continues until the winding up of partnership affairs is completed.
    • No new partnership business should be undertaken after dissolution.
    • Dissolution is different from a mere suspension in the conduct of its business or operations.

    Right to Wind Up Partnership Affairs

    • Unless otherwise agreed, the partners who have not wrongfully dissolved the partnership or the legal representative of the last surviving partner, not insolvent, has the right to wind up the partnership affairs.
    • Any partner, their legal representative, or assignee, upon cause shown, may obtain winding up by the court.

    Manner of Winding Up

    • Winding up can be done through judicial or extrajudicial means.
    • Judicial winding up is done under the control and direction of the court, and can be initiated by any partner, their legal representative, or assignee.
    • Extrajudicial winding up is done by the partners themselves without the intervention of the court.

    Persons Authorized to Wind Up

    • The persons authorized to wind up partnership affairs are:
      • Partners designated by the agreement (Winding-up Partner or Liquidating Partner)
      • All the partners who have not wrongfully dissolved the partnership (if no agreement exists)
      • The legal representative of the last surviving partner (when all partners are already dead), not insolvent

    Authority of Partners After Dissolution

    • After dissolution, a partner can bind the partnership in certain circumstances, including:
      • Any act appropriate for winding up partnership affairs or completing transactions unfinished at dissolution
      • Any transaction which would bind the partnership if dissolution had not taken place, provided the other party to the transaction had no knowledge or notice of the dissolution

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    Description

    Learn about the concept of dissolution and winding up in partnerships according to Art. 1828. Understand the difference between dissolution, which is the change in the relation of partners, and winding up, which is the process of settling partnership affairs.

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