CALA 3 PDF - Partnership Dissolution

(4) When a specific thing, which a partner ARTICLE 1828. The dissolution of a had promised to contribute to the partnership is the change in the relation of partnership, perishes before the delivery; in the partners caused by any partner any case by the loss of the thing...

(4) When a specific thing, which a partner ARTICLE 1828. The dissolution of a had promised to contribute to the partnership is the change in the relation of partnership, perishes before the delivery; in the partners caused by any partner any case by the loss of the thing, when the ceasing to be associated in the carrying on partner who contributed it having as distinguished from the winding up of reserved the ownership thereof, has only the business. (n) transferred to the partnership the use or enjoyment of the same; but the ARTICLE 1829. On dissolution the partnership shall not be dissolved by the partnership is not terminated, but loss of the thing when it occurs after the continues until the winding up of partnership has acquired the ownership partnership affairs is completed. (n) thereof; ARTICLE 1830. Dissolution is caused: (5) By the death of any partner; (1) Without violation of the agreement (6) By the insolvency of any partner or of between the partners: the partnership; (a) By the termination of the definite term (7) By the civil interdiction of any partner; or particular undertaking specified in the agreement; (8) By decree of court under the following article. (1700a and 1701a) (b) By the express will of any partner, who must act in good faith, when no definite ARTICLE 1831. On application by or for a term or particular undertaking is specified; partner the court shall decree a dissolution whenever: (c) By the express will of all the partners who have not assigned their interests or (1) A partner has been declared insane in suffered them to be charged for their any judicial proceeding or is shown to be separate debts, either before or after the of unsound mind; termination of any specified term or particular undertaking; (2) A partner becomes in any other way incapable of performing his part of the (d) By the expulsion of any partner from partnership contract; the business bona fide in accordance with such a power conferred by the agreement (3) A partner has been guilty of such between the partners; conduct as tends to affect prejudicially the carrying on of the business; (2) In contravention of the agreement between the partners, where the (4) A partner wilfully or persistently circumstances do not permit a dissolution commits a breach of the partnership under any other provision of this article, by agreement, or otherwise so conducts the express will of any partner at any time; himself in matters relating to the partnership business that it is not (3) By any event which makes it unlawful reasonably practicable to carry on the for the business of the partnership to be business in partnership with him; carried on or for the members to carry it on in partnership; (5) The business of the partnership can (2) The dissolution being by the death or only be carried on at a loss; insolvency of a partner, the partner acting for the partnership had knowledge or (6) Other circumstances render a notice of the death or insolvency. dissolution equitable. ARTICLE 1834. After dissolution, a partner On the application of the purchaser of a can bind the partnership, except as partner’s interest under article 1813 or 1814: provided in the third paragraph of this article: (1) After the termination of the specified term or particular undertaking; (1) By any act appropriate for winding up partnership affairs or completing (2) At any time if the partnership was a transactions unfinished at dissolution; partnership at will when the interest was assigned or when the charging order was (2) By any transaction which would bind issued. (n) the partnership if dissolution had not taken place, provided the other party to ARTICLE 1832. Except so far as may be the transaction: necessary to wind up partnership affairs or to complete transactions begun but not (a) Had extended credit to the then finished, dissolution terminates all partnership prior to dissolution and had no authority of any partner to act for the knowledge or notice of the dissolution; or partnership: (b) Though he had not so extended (1) With respect to the partners, credit, had nevertheless known of the (a) When the dissolution is not by the act, partnership prior to dissolution, and, insolvency or death of a partner; or having no knowledge or notice of dissolution, the fact of dissolution had not (b) When the dissolution is by such act, been advertised in a newspaper of general insolvency or death of a partner, in cases circulation in the place (or in each place if where article 1833 so requires; more than one) at which the partnership business was regularly carried on. (2) With respect to persons not partners, as declared in article 1834. (n) The liability of a partner under the first paragraph, No. 2, shall be satisfied out of ARTICLE 1833. Where the dissolution is partnership assets alone when such caused by the act, death or insolvency of a partner had been prior to dissolution: partner, each partner is liable to his co-partners for his share of any liability (1) Unknown as a partner to the person created by any partner acting for the with whom the contract is made; and partnership as if the partnership had not been dissolved unless: (2) So far unknown and inactive in partnership affairs that the business (1) The dissolution being by act of any reputation of the partnership could not be partner, the partner acting for the said to have been in any degree due to his partnership had knowledge of the connection with it. dissolution; or The partnership is in no case bound by any the dissolution and the person or act of a partner after dissolution: partnership continuing the business. (1) Where the partnership is dissolved The individual property of a deceased because it is unlawful to carry on the partner shall be liable for all obligations of business, unless the act is appropriate for the partnership incurred while he was a winding up partnership affairs; or partner, but subject to the prior payment of his separate debts. (n) (2) Where the partner has become insolvent; or ewIisi ARTICLE 1836. Unless otherwise agreed, the partners who have not wrongfully (3) Where the partner has no authority to dissolved the partnership or the legal wind up partnership affairs; except by a representative of the last surviving partner, transaction with one who — not insolvent, has the right to wind up the partnership affairs, provided, however, that (a) Had extended credit to the any partner, his legal representative or his partnership prior to dissolution and had no assignee, upon cause shown, may obtain knowledge or notice of his want of winding up by the court. (n) authority; or ARTICLE 1837. When dissolution is caused (b) Had not extended credit to the in any way, except in contravention of the partnership prior to dissolution, and, partnership agreement, each partner, as having no knowledge or notice of his want against his co-partners and all persons of authority, the fact of his want of claiming through them in respect of their authority has not been advertised in the interests in the partnership, unless manner provided for advertising the fact of otherwise agreed, may have the dissolution in the first paragraph, No. 2 (b). partnership property applied to discharge its liabilities, and the surplus applied to pay Nothing in this article shall affect the in cash the net amount owing to the liability under article 1825 of any person respective partners. But if dissolution is who after dissolution represents himself or caused by expulsion of a partner, bona fide consents to another representing him as a under the partnership agreement and if partner in a partnership engaged in the expelled partner is discharged from all carrying on business. (n) partnership liabilities, either by payment or agreement under the second paragraph of ARTICLE 1835. The dissolution of the article 1835, he shall receive in cash only partnership does not of itself discharge the the net amount due him from the existing liability of any partner. partnership. A partner is discharged from any existing When dissolution is caused in liability upon dissolution of the partnership contravention of the partnership by an agreement to that effect between agreement the rights of the partners shall himself, the partnership creditor and the be as follows: person or partnership continuing the business; and such agreement may be (1) Each partner who has not caused inferred from the course of dealing dissolution wrongfully shall have: (a) All the between the creditor having knowledge of rights specified in the first paragraph of of the partner’s interest the value of the this article, and good-will of the business shall not be considered. (n) (b) The right, as against each partner who has caused the dissolution ARTICLE 1838. Where a partnership wrongfully, to damages for breach of the contract is rescinded on the ground of the agreement. fraud or misrepresentation of one of the parties thereto, the party entitled to (2) The partners who have not caused the rescind is, without prejudice to any other dissolution wrongfully, if they all desire to right, entitled: continue the business in the same name either by themselves or jointly with others, (1) To a lien on, or right of retention of, the may do so, during the agreed term for the surplus of the partnership property after partnership and for that purpose may satisfying the partnership liabilities to third possess the partnership property, provided persons for any sum of money paid by him they secure the payment by bond for the purchase of an interest in the approved by the court, or pay any partner partnership and for any capital or who has caused the dissolution wrongfully, advances contributed by him; the value of his interest in the partnership at the dissolution, less any damages (2) To stand, after all liabilities to third recoverable under the second paragraph, persons have been satisfied, in the place of No. 1 (b) of this article, and in like manner the creditors of the partnership for any indemnify him against all present or future payments made by him in respect of the partnership liabilities. partnership liabilities; and (3) A partner who has caused the (3) To be indemnified by the person guilty dissolution wrongfully shall have: of the fraud or making the representation against all debts and liabilities of the (a) If the business is not continued partnership. (n) under the provisions of the second paragraph, No. 2, all the rights of a partner ARTICLE 1839. In settling accounts under the first paragraph, subject to between the partners after dissolution, the liability for damages in the second following rules shall be observed, subject paragraph, No. 1 (b), of this article. to any agreement to the contrary: (b) If the business is continued (1) The assets of the partnership are: (a) The under the second paragraph, No. 2, of this partnership property, article, the right as against his co-partners and all claiming through them in respect (b) The contributions of the partners of their interests in the partnership, to have necessary for the payment of all the the value of his interest in the partnership, liabilities specified in No. 2. less any damage caused to his co-partners (2) The liabilities of the partnership shall by the dissolution, ascertained and paid to rank in order of payment, as follows: (a) him in cash, or the payment secured by a Those owing to creditors other than bond approved by the court, and to be partners, released from all existingliabilities of the (b) Those owing to partners other than for partnership; but in ascertaining the value capital and profits, (c) Those owing to partners by way of (c) Those owing to partners in respect of contribution. (n) capital, ARTICLE 1840. In the following cases (d) Those owing to partners in respect of creditors of the dissolved partnership are profits. also creditors of the person or partnership continuing the business: (3) The assets shall be applied in the order of their declaration in No. 1 of this article to (1) When any new partner is admitted into the satisfaction of the liabilities. an existing partnership, or when any partner retires and assigns (or the (4) The partners shall contribute, as representative of the deceased partner provided by article 1797, the amount assigns) his rights in partnership property necessary to satisfy the liabilities. to two or more of the partners, or to one or more of the partners and (5) An assignee for the benefit of creditors or any person appointed by the court shall one or more third persons, if the business have the right to enforce the contributions is continued without liquidation of the specified in the preceding number. partnership affairs; (6) Any partner or his legal representative (2) When all but one partner retire and shall have the right to enforce the assign (or the representative of a deceased contributions specified in No. 4, to the partner assigns) their rights in partnership extent of the amount which he has paid in property to the remaining partner, who excess of his share of the liability. continues the business without liquidation of partnership affairs, either alone or with (7) The individual property of a deceased others; partner shall be liable for the contributions specified in No. 4. (3) When any partner retires or dies and the business of the dissolved partnership is (8) When partnership property and the continued as set forth in Nos. 1 and 2 of this individual properties of the partners are in article, with the consent of the retired possession of a court for distribution, partners or the representative of the partnership creditors shall have priority on deceased partner, but without any partnership property and separate assignment of his right in partnership creditors on individual property, saving the property; rights of lien or secured creditors. (4) When all the partners or their (9) Where a partner has become insolvent representatives assign their rights in or his estate is insolvent, the claims against partnership property to one or more third his separate property shall rank in the persons who promise to pay the debts and following order: who continue the business of the dissolved partnership; (a) Those owing to separate creditors; (5) When any partner wrongfully causes a (b) Those owing to partnership creditors; dissolution and the remaining partners continue the business under the provisions of article 1837, second paragraph, No. 2, ARTICLE 1841. When any partner retires or either alone or with others, and without dies, and the business is continued under liquidation of the partnership affairs; any of the conditions set forth in the preceding article, or in article 1837, second (6) When a partner is expelled and the paragraph, No. 2, without any settlement remaining partners continue the business of accounts as between him or his estate either alone or with others without and the person or partnership continuing liquidation of the partnership affairs. the business, unless otherwise agreed, he or his legal The liability of a third person becoming a partner in the partnership continuing the representative as against such person or business, under this article, to the creditors partnership may have the value of his of the dissolved partnership shall be interest at the date of dissolution satisfied out of the partnership property ascertained, and shall receive as an only, unless there is a stipulation to the ordinary creditor an amount equal to the contrary. value of his interest in the dissolved partnership with interest, or, at his option When the business of a partnership after or at the option of his legal representative, dissolution is continued under any in lieu of interest, the profits attributable to conditions set forth in this article the the use of his right in the property of the creditors of the dissolved partnership, as dissolved partnership; provided that the against the separate creditors of the creditors of the dissolved partnership as retiring or deceased partner or the against the separate creditors, or the representative of the deceased partner, representative of the retired or deceased have a prior right to any claim of the partner, shall have priority on any claim retired partner or the representative of the arising under this article, as provided by deceased partner against the person or article 1840, third paragraph. (n) partnership continuing the business, on account of the retired or deceased ARTICLE 1842. The right to an account of partner’s interest in the dissolved his interest shall accrue to any partner, or partnership or on account of any his legal representative as against the consideration promised for such interest or winding up partners or the surviving for his right in partnership property. partners or the person or partnership continuing the business, at the date of Nothing in this article shall be held to dissolution, in the absence of any modify any right of creditors to set aside agreement to the contrary. (n) any assignment on the ground of fraud. 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 debts contracted by such person or partnership. (n)