| | 3. Section 601(2) provides expressly that a partner is | dissociated upon an event agreed to in the partnership agreement | as causing dissociation. There is no such provision in the UPA, | but that result has been assumed. |
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| | 4. Section 601(3) provides that a partner may be expelled by | the other partners pursuant to a power of expulsion contained in | the partnership agreement. That continues the basic rule of UPA | Section 31(1)(d). The expulsion can be with or without cause. | As under existing law, the obligation of good faith under Section | 404(d) does not require prior notice, specification of cause, or | an opportunity to be heard. See Holman v. Coie, 11 Wash. App. | 195, 522 P.2d 515, cert. denied, 420 U.S. 984 (1974). |
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| | 5. Section 601(4) empowers the partners, by unanimous vote, | to expel a partner for specified causes, even if not authorized | in the partnership agreement. This changes the UPA Section | 31(1)(d) rule that authorizes expulsion only if provided in the | partnership agreement. A partner may be expelled from a term | partnership, as well as from a partnership at will. Under | Section 103(a), the partnership agreement may change or abolish | the partners' power of expulsion. |
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| | Subsection (4)(i) is derived from UPA Section 31(3). A | partner may be expelled if it is unlawful to carry on the | business with that partner. Section 801(4), on the other hand, | provides that the partnership itself is dissolved and must be | wound up if substantially all of the business is unlawful. |
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| | Subsection (4)(ii) provides that a partner may be expelled for | transferring substantially all of his transferable interest in | the partnership, other than as security for a loan. (He may, | however, be expelled upon foreclosure.) This rule is derived | from UPA Section 31(1)(c). To avoid the presence of an unwelcome | transferee, the remaining partners may dissolve the partnership | under Section 801(2)(ii), after first expelling the transferor | partner. A transfer of a partner's entire interest may, in some | circumstances, evidence the transferor's intention to withdraw | under Section 601(1). |
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| | Subsection (4)(iii) provides for the expulsion of a corporate | partner if it has filed a certificate of dissolution, its charter | has been revoked, or its right to conduct business has been | suspended, unless cured within 90 days after notice. This | provision is derived from RULPA Section 402(9). The cure proviso | is important because charter revocation is very common in some | States and partner status should not end merely because of a | technical noncompliance with corporate law that can easily be | cured. Withdrawal of a voluntarily filed notice of dissolution | constitutes a cure. |
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