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1828 DISSOLUTION of a partnership –is the change in the relation of the partners caused by any partner ceasing to be
associated in carrying on as distinguished from the winding up of business
1829 (the partnership is not terminated, but continues until the winding up of partnership affairs completed.
a) TERMINATION- THE POINT IN TIME AFTER ALL THE PARTNERSHIP AFFAIRS HAVE BEEN WOUND UP
b) WINDING-UP- as the process of settling business affairs after dissolution (e.g. the paying of previous obligations; the
collecting of assets previously demandable; even new business if needed to wind up.)
c) Dissolution breaks the contractual privity between and among the partners
BUT does not necessarily give rise to winding upon termination of partnership business enterprise for it may actually
lead to the constitution of a new partnership contract among the partners who choose to proceed with the partnership
business
DISSOLUTION
DISSOLUTION IPSO JURE WITHOUT NEED OF COURT DECREE
a) The article recognizes the inherent risk that business undertakings are exposed to many of which cannot be
anticipated at the time the partnership agreement is entered into. Sets up the mechanism for the parties to ask a
tribunal to determine that the circumstances have rendered the rationale of the partnership agreement inutile.
b) It is because judicial declaration of insanity does not proceed from a criminal conviction as in the case of civil
interdiction. That the law recognizes that the insane partner still has an estate that has a right to benefit from the
properties and rights to which a partner is entitled to.
c) LAST FOUR GROUNDS- When there are circumstances prevailing in the partnership setting that endanger or
undermine the viability of the partnership enterprise, any of the partners is given standing to seek for court
determination of the existences of such situation and decree the dissolution of the partnership.
d) When a partner engages in a separate business enterprise that is competitive with that of the partnership and even
withdraws equipment contributed into the partnership enterprise, the other partner’s withdrawal thereby justified.
B) Partners who have not caused the dissolution MAY, IF THEY SO DESIRE:
i continue the business in the same name either by themselves or jointly with others
ii and for that purpose may possess the partnership property, provided they secure thew payment bond approved by
the court, or pay to any partner who caused the wrongful dissolution the value of his interest in the partnership at the
dissolution less any damages for brach of the agreement and indemnify him against all present or future partnership
liabilities.
C) Partners who caused the dissolution wrongfully shall only have:
IF THE BUSINESS NOT CONTINUED--- all the rights of a partner for share in the net assets of the partnership after
payment of liabilities, subject to liability for damages incurred due to such wrongful dissolution
IF THE BUSINESS CONTINUED--- The right as against his co-partners and all claiming through them in respect of their
interest in the partnership
---- Value of goodwill shall not be considered