Law on Partnerships and Corporations

Topics: Partnership, Bankruptcy, Liquidation Pages: 7 (1922 words) Published: March 6, 2013
(Art. 1833-1836)
Where the dissolution is caused bythe act, death or insolvency of partner, eachpartner is liable to his co-partners for his share of any liability created by any partner acting for thepartnership as if the partnership had not beendissolved unless: 1.)The dissolution being the act of anypartner, the partner acting for thepartnership had knowledge of thedissolution; or 2.)The dissolution being by the death orinsolvency of a partner, the partner actingfor the partnership had knowledge ornotice of the death or insolvency. Right of partner to contribution from co-partners

The above article speaks of dissolution caused by act,insolvency, or death of a partner. Where a partner enters into a new contract with a 3rd person after dissolution, partners generally bound. Authority of partners to act for thepartnership

The authority of a partner as it affects his co-partners(not 3rdpersons) is deemed terminated except in Nos. 1and 2 of 1833. Knowledge or notice of cause of dissolution
Dissolution by death or insolvency – 
Whenpartner dead or bankrupt and other partner did notknow it when he entered into transaction, he may call onother partners to contribute. Dissolution by court decree or resulting from unlawfulness –  No problem exists in these cases. If bycourt decree, all partners have actual notice of dissolution. If due to unlawfulness, general rulesgoverning actions arising out of illegal transactionsapply. When a partner has knowledge or notice of a fact

Uniform Partnership Act:
Not only actual but also knowledge of such other facts as in the circumstances show bad faith. Notice: 
When the person who claims the benefit of the notice:
1.)States the fact to such person; or
2.) Delivers through the mail or by other means of communication, a written statement of the factor to a proper person at his place of business orresidence.

After dissolution, a partner can bindthe partnership except as provided in the thirdparagraph of this article: 1.)By any act appropriate for winding uppartnership affairs or completingtransactions unfinished at dissolution; or 2.)By any transaction which would bind thepartnership if dissolution had not takenplace, provided the other party to thetransaction: a.) Had extended credit to thepartnership prior to dissolution andhad no knowledge or notice of thedissolution; or b.)Though he had not so extendedcredit, had nevertheless known of the partnership prior to dissolution,and, having no knowledge or noticeof dissolution, the fact of dissolutionhad not been advertised in anewspaper of general circulation inthe place (or in each place if morethan one) at which the partnershipbusiness was regularly carried on.The liability of a partner under the firstparagraph, No. 2, shall be satisfied out of partnership assets alone when such partner hadbeen prior to dissolution: 1.)Unknown as a partner to the person withwhom the contract is made; and 2.)So far unknown and inactive inpartnership affairs that the businessreputation of the partnership could not besaid to have been in any degree due to hisconnection with it.The partnership is in no case bound by any actof a partner after dissolution: 1.)Where the partnership is dissolvedbecause it is unlawful to carry on thebusiness, unless the act is appropriate forwinding up partnership affairs; or 2.)Where the partner has become insolvent;or

3.)Where the partner has no authority towind up partnership affairs, except by atransaction with one who – a.)Had extended credit to thepartnership prior to dissolution andhad no knowledge or notice of hiswant of authority; or b.)Had not extended credit to thepartnership prior to dissolution, and,having no knowledge or notice of hiswant of authority, the fact of hiswant of authority has not beenadvertised in the manner providedfor advertising the fact of dissolutionin the first paragraph, No. 2.Nothing in...
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