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- 2. Dissolution, Winding up and Termination 1828 ARTICLE WINDINGUP TERMINATION DISSOLUTION It is that point in time when the partners cease to carry on the business together. It is the process of settling the business or partnership affairs after dissolution. It is that point in time when all partnership affairs are completely wound up and finally settled.
- 3. • Affairs should be liquidated and distribution made to those entitled to the partner’s interest. • The dissolution of a partnership must not be understood to mean its extinguishment. • Dissolution refers to the change in partnership relation and not the actual cessation of the partnership business. Partnership Not Terminated by Dissolution 1829 ARTICLE
- 4. By the termination of the definite term or particular undertaking specified in the agreement; By the express will of any partner, who must act in good faith, when no definite term or particular is specified; By the express will of all the partners who have not assigned their interests or suffered them to be charged for their separate debts, either before or after the termination of any specified term or particular undertaking; By the expulsion of any partner from the business bona fide in accordance with such a power conferred by the agreement between the partners; Causes of Dissolution 1830 ARTICLE Without violationoftheagreementbetweenthepartners:
- 5. • Dissolution may be for any cause or reason and power of dissolution always exist. • The withdrawing partner is liable for damages for unjustified dissolution. 1830 ARTICLE Causes of Dissolution Incontraventionoftheagreementbetweenthepartners,wherethe circumstancesdonotpermitadissolutionunderanyotherprovisionofthis article,bytheexpresswillofanypartneratanytime
- 6. A partnership must have a lawful object or purpose. 1830 ARTICLE Causes of Dissolution Byanyeventwhichmakesitunlawfulforthebusinessofthepartnershiptobe carriedonorforthememberstocarryitoninpartnership
- 7. 1830 ARTICLE Causes of Dissolution LossofSpecificThing LossafterDelivery LossbeforeDelivery Losswhereonlyuseor enjoymentiscontributed If the specific thing to be contributed by a partner is lost before delivery, the partnership is dissolved. If the loss occurred after the delivery of the thing promised, then partnership is not dissolved. The loss of this thing before or after the delivery dissolves the partnership.
- 9. The insolvency of a partner subjects his interest in the partnership to the right of is creditors and makes it impossible for him to satisfy partnership obligations to its creditors. 1830 ARTICLE Causes of Dissolution BytheInsolvencyofanyPartnerorofthePartnership
- 10. A convicted person suffering from the accessory penalty of civil interdiction cannot validly give consent as his capacity is limited thereby 1830 ARTICLE Causes of Dissolution Bycivilinterdictionofanypartner BydecreeofcourtunderthefollowingArticle (1700aand1701a)
- 11. 1831 ARTICLE Grounds for Dissolution Onapplicationbyapartner INSANITY INCAPACITY MISCONDUCT AND PERSISTENT BREACH OF PARTNERSHIP AGREEMENT BUSINESS CAN BE CARRIED ONLY AT LOSS OTHER CIRCUMSTANCES
- 13. 1832 ARTICLE EFFECT OF DISSOLUTION ON AUTHORITY OF PARTNER GENERALRULE QUALIFICATIONTOTHERULE In so far as the partners themselves are concerned. With respect to third persons.
- 14. 1833 ARTICLE AUTHORITY OF PARTNERS, AS AMONG THEMSELVES, TO ACT FOR THE PARTNERSHIP The cause of the dissolution is the act of a partner and the acting partner had knowledge of such dissolution. The cause of the dissolution is the death or insolvency of a partner and the acting partner had knowledge or notice of the death or insolvency.
- 15. 1834 ARTICLE Power of partner to bind dissol ved partnership to third persons By an act appropriate for winding up partnership affairs of completing transactions unfinished at dissolution;
- 16. (a) Had extended credit to the partnership prior to dissolution and had knowledge or notice of the dissolution (b) Though he had not so extended credit, had nevertheless known of the partnership prior to dissolution, and, having 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 that one) at which the partnership was regularly carried on. By any transaction which would bind the partnership if dissolution had not taken place, provided the other party to the transaction: 1834 ARTICLE Power of partner to bind dissol ved partnership to third persons
- 17. • As to persons who extended credit to partnership to dissolution • As to persons who had known of partnership’s existence • Where acting partner has no authority to wind up partnership affairs • Where acting partner has become insolvent 1834 ARTICLE Notice of dissolution to partners
- 18. The dissolution of a partnership does not of itself discharge the existing liability of a partner. A partner may be relieved from all existing liabilities upon dissolution only by an agreement to that effect between himself, the partnership creditor and the other partners. 1835 ARTICLE Effect of dissolution on partner’s existing liability
- 19. The individual property of a deceased partner shall be liable for all obligations of the partnership incurred while he was a partner with preference to his individual creditors. 1835 ARTICLE Liability of estate of deceased partner
- 21. 1836 ARTICLE PERSONS AUTHORIZED TO WIND UP
- 22. 1837 ARTICLE Right of partner to application of partnership property on dissolution Dissolution without contravention of the partnership agreement. Dissolution in contravention of the partnership agreement. A. Rights of partner who has not caused the dissolution wrongfully. B. Rights of partner who has caused the dissolution wrongfully.
- 23. Right of Partner to Rescind Contract of Partnership Inducement of an individual to become a partner by means of fraud or misrepresentation makes the partnership contract voidable and annullable. Continuous existence of partnership. INJURED PARTNER IS ENTITLED TO RESTITTUTION DEFRAUDED PARTNER LIABLE FOR ALL OBLIGATIONS TO THIRD PERSONS. 1838 ARTICLE
- 24. Right of Injured Partner where Partnership Contract Rescinded Right of a lien on, or retention of, the surplus of partnership property after satisfying partnership liabilities for any sum of money paid or contributed by him. Right to stand in the place of the creditors of the partnership after payment of partnership liabilities Right of indemnification by the guilty partner against all debts and liabilities of the partnership. 1838 ARTICLE
- 25. Rules in Settling Accounts between Partners after Dissolution PartnershipProperty ContributionsofPartners ASSETSOFTHEPARTNERSHIP 1839 ARTICLE
- 26. Rules in Settling Accounts between Partners after Dissolution Partnership Creditors Loans to Partners Return of capital contributions Share in profits ORDEROFAPPLICATIONOFTHEASSETS 1839 ARTICLE
- 27. Rules in Settling Accounts between Partners after Dissolution Enforce contributions of the Partners Capital Loss of a Partner Only few partners contribute Sue non-paying partners for indemnification. All partners contributed Rightofapartnerwhereassetsinsufficient 1839 ARTICLE
- 28. Rules in Settling Accounts between Partners after Dissolution Only liabilities of the partnership incurred while the deceased partner is a partner will be attached to individual property as his share. Liabilityofdeceasedpartner’sindividualproperty Liabilities covered by individual property of a deceased partner 1839 ARTICLE
- 29. Rules in Settling Accounts between Partners after Dissolution PRIORITYTOPAYMENTOFPARTNERSHIPCREDITORS/PARTNER’SCREDITORS 1839 ARTICLE PARTNERSHIP PROPERTY INDIVIDUAL PROPERTY PARTNERSHIP CREDITORS INDIVIDUAL CREDITORS
- 30. Rules in Settling Accounts between Partners after Dissolution DISTRIBUTIONOFPROPERTYOFINSOLVENTPARTNER 1839 ARTICLE SEPARATE CREDITORS PARTNERSHIP CREDITORS CONTRIBUTION TO PARTNERS
- 31. Dissolution of Partnership by Change in Membership ADMISSION OF NEW PARTNER RETIREMENT, DEATH, WITHDRAWAL OR EXPULSION OF A PARTNER PARTNER’S ASSIGNMENT OF RIGHTS TO SOLE REMAINING PARTNER ALL PARTNERS’ ASSIGNMENT OF RIGHTS TO THIRD PERSONS 1840 ARTICLE
- 32. Rights of Creditors of Dissol ved Partnership which is Continued 1840 ARTICLE DISSOLVED PARTNERSHIP CREDITORS NEW PARTNERSHIP CREDITORS CONTINUING PARTNERSHIP CREDITORS
- 33. Liability of Persons Continuing Business of Dissol ved Partnerships 1840 ARTICLE The liability of the new or incoming partners shall be satisfied out of partnership property only unless there is stipulation to the contrary. Obligations to the debts of the dissolved partnership of one or more third persons who continue the partnership shall apply only when the continuing partners promise to pay such.
- 34. Rights of Retiring or of Legal Representative of Deceased Partner when Business is Deceased 1841 ARTICLE To have the value of the interest of the retiring partner or deceased partner in the partnership ascertained as of the date of dissolution. To receive thereafter, as an ordinary creditor, an amount equal to the value of his share in the dissolved partnership with interest, or, at his option, in lieu of interest , the profits attributable to the use of his right.
- 35. Partner’s Right to Account of His Interest 1842 ARTICLE Accrual Right The right to demand an accounting of the value of his interest accrues to any partners or his legal representative after dissolution in the absence of an agreement to the contrary.
- 36. 1842 ARTICLE Partner’s Right to Account of His Interest Person liable to render an account The right of a partner or the one who represents him as owner of his interest to an account to a payment of the amount of his interest, may be exercised as against: 1. The winding up partner 2. The surviving partner 3. The person or partnership continuing the business.