LD 1609
pg. 88
Page 87 of 148 An Act To Establish the Uniform Partnership Act Page 89 of 148
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LR 1469
Item 1

 
Under subsection (b), a partner's dissociation is wrongful if (1)
it breaches an express provision of the partnership agreement or
(2), in a term partnership, before the expiration of the term or
the completion of the undertaking (i) the partner voluntarily
withdraws by express will, except a withdrawal following another
partner's wrongful dissociation or dissociation by death or
otherwise under Section 601(6) through (10); (ii) the partner is
expelled for misconduct under Section 601(5); (iii) the partner
becomes a debtor in bankruptcy (see Section 101(2)); or (iv) a
partner that is an entity (other than a trust or estate) is
expelled or otherwise dissociated because its dissolution or
termination was willful. Since subsection (b) is merely a default
rule, the partnership agreement may eliminate or expand the
dissociations that are wrongful or modify the effects of wrongful
dissociation.

 
The exception in subsection (b)(2)(i) is intended to protect a
partner's reactive withdrawal from a term partnership after the
premature departure of another partner, such as the partnership's
rainmaker or main supplier of capital, under the same
circumstances that may result in the dissolution of the
partnership under Section 801(2)(i). Under that section, a term
partnership is dissolved 90 days after the bankruptcy,
incapacity, death (or similar dissociation of a partner that is
an entity), or wrongful dissociation of any partner, unless a
majority in interest (see Comment 5(i) to Section 801 for a
discussion of the term "majority in interest") of the remaining
partners agree to continue the partnership. Under Section
602(b)(2)(i), a partner's exercise of the right of withdrawal by
express will under those circumstances is rendered "rightful,"
even if the partnership is continued by others, and does not
expose the withdrawing partner to damages for wrongful
dissociation under Section 602(c).

 
A partner wishing to withdraw prematurely from a term
partnership for any other reason, such as another partner's
misconduct, can avoid being treated as a wrongfully dissociating
partner by applying to a court under Section 601(5)(iii) to have
the offending partner expelled. Then, the partnership could be
dissolved under Section 801(2)(i) or the remaining partners
could, by unanimous vote, dissolve the partnership under Section
801(2)(ii).

 
3. Subsection (c) provides that a wrongfully dissociating
partner is liable to the partnership and to the other partners
for any damages caused by the wrongful nature of the
dissociation. That liability is in addition to any other
obligation of the partner to the partnership or to the other
partners. For example, the partner would be liable for any


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