Exam 31: Operation and Dissolution of General Partnerships

Upon dissolution of a partnership, all authority of a partner to act on behalf of the partnership terminates.

A partner has the power to dissociate at any time by expressing the intent to withdraw.

A person has notice of a fact if the person has reason to know it exists from all of the facts known to the person at the time in question.

If the general partnership is bound by a contract, then each individual general partner has unlimited personal liability for that obligation.

Partners are not required to participate in winding up the partnership.

Norma leaves the Tri-County Accounting Partnership. She may immediately compete with the partnership for new clients and may collect and keep the fees she earns from both new clients and from old clients on account of transactions she completes from her partnership with Tri-County.

Austin withdraws from a partnership and the remaining three partners decide to continue in business. Discuss the effect of the withdrawal on the partnership and on creditors rights under the UPA.

a. What is the liability of the partners for contracts regarding partnership business? b. What is the liability of the partnership for torts committed by a partner while acting in the ordinary course of partnership business? How does this compare to the liability of a principal under respondeat superior ? Explain.

Carolee, Joanna, and Ellen form Capital City Partnership. Carolee contributes expertise; Joanna, $15,000; and Ellen, $20,000. After a year, Joanna adds $12,000 as a loan. Ten years later, Capital owes $44,000 to creditors, total assets are $112,000, and the partners decide to dissolve the business. How will the assets be distributed under the UPA, and what will each partner receive?