LD 1609
pg. 83
Page 82 of 148 An Act To Establish the Uniform Partnership Act Page 84 of 148
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LR 1469
Item 1

 
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.

 
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).

 
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.

 
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.

 
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).

 
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has been revoked, or its right to conduct business has been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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