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Flashcards in Dissolution and Winding Up Deck (14)
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1

Effect of Dissolution

  • Partnership is not terminated on dissolution, it continues until the winding up of partnership affairs is completed
  • Limits the authority of a partner to act for the firm and/or partners

2

Liability after dissolution

  • Partner who creates a liability after dissolution
  • is entitled to contribution from his copartners, 
  • unless the dissolution was by :
    • the act of partner, and 
    • partner acting for the partnership had knowledge of its dissolution; or
    • by death or bankrupty of a partners,
    • and acting partner had knowledge/notice of the death or bankruptcy

3

Causes of DIssolution

  1. Termination of term or undertaking
  2. By will or any partnership in partnership at will
  3. By agreement of all partners
  4. By explusion
  5. By unlawfulness
  6. by death or bankruptcy
  7. Insanity and incapacity
  8. Conduct prejudicial to business
  9. Breach of agreement or impracticability

4

Dissolution due to Termination of term or undertaking

Termination of the partcular term or underaking specificed in the partnership agreement results in dissolution

5

Termination due to will of any partner in partnership at will

Partnership may be dissolved by any partner who gives notice to the other partners of his deisre to terminate

6

Dissolution by agreement of all partners

Partnership can be dissolved at any time by unanimous consent of the partners

7

Dissolution by expulsion

Partnership is deemed dissolved if any partner is expelled from partnership in accordance with the partnership agreement

8

Dissolution by unlawfulness

Dissolution caused by any event that makes it unlawful for the business to be barried on, or for the members to carry it on in partnership

9

Dissolution by death or bankruptcy

Bankruptcy or death of any partner dissolves a partnership

10

Insanity & Incapacity

  • On appication for or by a partner
  • court will decree a dissolution whenever
  • partner is declared lunatic/or shown to be of unsound mind; or
  • partner becaomes incapable of performing his part of the partnership contract

11

Conduct prejudicial to business

Court will decree dissolution whenever a partner is guilty of conduct that prejudicially affects the carrying on of the business

12

Right to wind up

All partners who have not wrongfully dissolved the partnership have an equal right to wind up the firm's affairs

13

Powers and duties in winding up

  • Paying debts and completing unfinished transactions and contracts
  • Diposing of any/all of the partnership's real or personal property, and to close up business
  • Collect, pay, or compromse firm debts
  • Cannot make new contracts or create new liablities
    • Exception: to the extent necessary to settle affairs

14

Distibution of Assets

Liquidate partnership assets and settle obligations, then distribute remaining assets to partners

 

Assets:

  • Partnership property
  • Contributions from the partners necessary to pay partnership obligations to creditors and to partners