Business Assistant/Business Assistant.iso/legal/guide7-1/guide7-1.exe/LHARC1.EXE/PART_1.STB

Text File | 1991-06-27 | 20.8 KB | 477 lines

/* Here is the full text of the Uniform Partnership Act, together
with our commentary regarding the same. Unless it is absolutely
required for tax advantage, avoid partnership at all costs. The
powers of a rouge partner to bind all of the other partners are
too scary for words. */

                     UNIFORM PARTNERSHIP ACT

                             PART I

Section 1. Name of Act. This act may be cited as the Uniform
Partnership Act.

Section 2. Definition of terms. In this Act, "Court" includes
every court and  judge having jurisdiction in the case.

     "Business" includes every trade, occupation or profession.

     "Bankrupt" includes bankruptcy under the Federal Bankruptcy
Act or insolvent under any state insolvent act.

     "Conveyance" includes every assignment, lease, mortgage or
encumbrance.

     "Real property" includes land and any interest or estate in
land.

Section 3. Interpretation of Knowledge and Notice. (1) A person
has "knowledge" of a fact within the meaning of this Act not only
when he has actual knowledge thereof, but also when he has
knowledge of such other facts as in the circumstances shows bad
faith.

     (2) A person has "notice" of a fact within the meaning of
this Act when the person who claims the benefit of the notice:

     (a) States the fact to such person, or

     (b) Delivers through the mail, or by other manes of
communication, a written statement of the fact to such person or
to a proper person at his place of business or residence.

Section 4. Rules of construction. (1) The rule that statutes in
derogation of the common law are to be strictly construed shall
have no application under this Act.

     (2) The law of estoppel shall apply under this Act.

     (3) The law of agency shall apply under this Act.

     (4) This Act shall be so interpreted and construed as to
effect its general purpose to make uniform the law of those
states which enact it.

     (5) This Act shall not be construed so as to impair the
obligations of any contract existing when the Act goes into
effect, nor to affect any action or proceedings begun or right
accrued before this Act takes effect.

Section 5. Rules for Cases Not Provided for in this Act. In any
case not provided for in this Act the rules of law and equity,
including the law merchant, shall govern.

                             PART II
                     Nature of a partnership

Section 6. Partnership defined. (1) A partnership is an
association of two or more persons to carry on as co-owners a
business for profit.

     (2) But any association formed under any other statute of
this state, or statute adopted by authority, other than the
authority of this state, is not a partnership under this act,
unless such association would have been a partnership in this
state prior to the adoption of this act; but this act shall apply
to limited partnerships except in so far as the statutes relating
to such partnerships are inconsistent herewith.

Section 7. Rules for determining the existence of a partnership.
In determining whether a partnership exists, these rules shall
apply:

     (1) Except as provided by section 16 persons who are not
partners as to each other are not partners as to third persons.

     (2) Joint tenancy, tenancy in common, tenancy by the
entireties, joint property, common property, or part ownership
does not of itself establish a partnership, whether such co-
owners do or do not share any profits made by the use of the
property.

     (3) The sharing of gross returns does not of itself
establish a partnership, whether or not persons sharing them have
a joint or common right or interest in any property from which
the returns are derived.

     (4) The receipt by a person of a share of the profits of a
business is prima facie evidence that he is a partner in the
business, but no such inference shall be drawn if such profits
were received in payment:

     (a) As a debt by installments or otherwise;

     (b) As wages of an employee or rent to a landlord;

     (c) As an annuity to a widow or representative of a deceased
partner;

     (d) As interest on a loan, though the amount of payment
varies with the profits of the business;

     (e) As the consideration for the sale of a good-will of a
business or other property by installments or otherwise.

Section 8. Partnership property. (1) All property originally
brought into the partnership stock or subsequently acquired by
purchase or otherwise, on account of the partnership, is
partnership property.

     (2) Unless contrary intent appears, property acquired with
partnership funds is partnership property.

     (3) Any estate in real property may be acquired in the
partnership name. Title so acquired can be conveyed only in the
partnership name.

     (4) A conveyance to a partnership in the partnership name,
though without words of inheritance, passes the entire estate of
the grantor unless a contrary intent appears.

                            PART III
  RELATIONS OF PARTNERS TO PERSONS DEALING WITH THE PARTNERSHIP

Section 9. Partner agent of partnership as to Partnership
Business. (1) Every partner is an agent of the partnership for
the purpose of its business, and the act of every partner,
including the execution in the partnership name of any
instrument, for apparently carrying on in the usual way the
business of the partnership of which he is a member binds the
partnership, unless the partner so acting has in fact no
authority to act for the partnership in the particular matter,
and the person with whom he is dealing has knowledge of the fact
that he has no such authority.

     (2) An act of a partner which is not apparently for the
carrying on of the business of the partnership in the usual way
does not bind the partnership unless authorized by the other
partners.

     (3) Unless authorized by the other partners or unless they
have abandoned the business, one or more but less than all of the
partners have no authority to:

     (a) Assign the partnership property in trust for creditors
or on the assignee's promise to pay the debts of the partnership,

     (b) Dispose of the good-will of the business,

     (c) Do any other act which would make it impossible to carry
on the ordinary business of a partnership,

     (d) Confess a judgment,

     (e) Submit a partnership claim or liability in arbitration
or reference.

     (4) No act of a partner in contravention of a restriction on
authority shall bind the partnership to persons having knowledge
of the restriction.

Section 10. Conveyance of Real Property of the Partnership. (1)
where title to real property is in the partnership name, any
partner may convey title to such property by a conveyance
executed in the partnership name; but the partnership may recover
such property unless the partner's act binds the partnership
under the provisions of paragraph (1) of Section 9 or unless such
property has been conveyed by the grantee or a person claiming
through such grantee to a holder for value without knowledge that
the partner, in making the conveyance, has exceeded his
authority.

     (2) Where title to real property is in the partnership name,
a conveyance executed by a partner, in his own name, passes the
equitable interest of the partnership, provided that the act is
one within the authority of the partner under the provision of
paragraph (1) of section 9.

     (3) Where title to real property is in the name of one or
more but not all the partners, and the record does not disclose
the right of the partnership, the partners in whose name the
title stands may convey title to such property, but the
partnership may recover such property if the partner's act does
not bud the partnership under the provisions of paragraph (1) of
section 9, unless the purchaser or his assignee, is a holder for
value, without knowledge.

     (4) Where the title to real property is in the name of one
or more or all of the partners, or in a third person in trust for
the partnership, a conveyance executed by a partner in the
partnership name, or in his own name, passes the equitable
interest of the partnership, provided that the act is one within
the authority of the partner under the provisions of paragraph
(1) of section 9.

     (5) Where the title to real property is in the name of all
the partners a conveyance executed by all the partners passes all
their rights in such property.

Section 11. Partnership Bound by Admission of Partner. An
admission or representation made by any partner concerning
partnership affairs within the scope of his authority as
conferred by this Act is evidence against the partnership.

Section 12. Partnership Charged with Knowledge of or Notice to
Partner. Notice to any partner of any matter related to
partnership affairs, and the knowledge of the partner acting in
the particular matter, acquired while a partner or then present
in his mind, and the knowledge of any other partner who
reasonably could and should have communicated it to then acting
partner, operate as notice to or knowledge of the partnership,
except in the case of a fraud on the partnership committed by or
with consent of that partner.

Section 13. Partnership Bound by Partner's Wrongful Act. Where, by
any wrongful act or omission of any partner acting in the
ordinary course of the business of the partnership or with the
authority of his co-partners, loss or injury is caused to any
person, not being a partner of the partnership, or any penalty is
incurred, the partnership is liable therefor to the same extent
as the partner so acting or omitting to act.

Section 14. Partnership Bound by Partner's Breach of Trust. The
partnership is bound to make good the loss:

     (a) Where one partner acting within the scope of his
apparent authority receives money or property of a third person
and misapplies it; and

     (b) Where the partnership in the course of its business
receives money or property of a third person and the money or
property so received is misapplied by any  partner while it is in
the custody of the partnership.

Section 15. Nature of Partner's Liability. All partners are
liable:

     (a) Jointly and severally for everything chargeable to the
partnership under sections 13 and 14.

     (b) Jointly for all other debts and obligations of the
partnership, but any partner may enter into a separate obligation
to perform a partnership contract.

Section 16. Partner by estoppel. (1) When a person, by words
spoken or written or by conduct, represents himself, or consents
to another representing him to any one, as a partner in an
existing partnership or with one or more persons not actual
partners, he is liable to any such person to whom such
representation has been made, who has, on the faith of such
representation, given credit to the actual or apparent
partnership, and if he has made such representation or consented
to its being made in a public manner he is liable to such person,
whether the representation has or has not been made or
communicated to such person so giving credit by or with the
knowledge of the apparent partner making the representation or
consenting to its being made:

     (a) When a partnership liability results, he is liable as
though he were an actual member of the partnership.

     (b) When no partnership liability results, he is liable
jointly with the other persons, if any, so consenting to the
contract or representation as to incur liability, otherwise
separately.

     (2) When a person has been thus represented to be a partner
in an existing partnership, or with one or more persons not
actual partners, he is an agent of the persons consenting to such
representation to bind them to the same extent and in the same
manner as though he was a partner in fact, with respect to
persons who rely upon the representation. Where all members of
the existing partnership consent to the representation, a
partnership act or obligation results; but in all other cases it
is the joint act or obligation of the person acting and the
persons consenting to the representation.

Section 17.Liability of Incoming Partner.. A person admitted as a
partner into an existing partnership is liable for all the
obligations of the partnership arising before his admission as
though he had been a partner when such obligations were incurred,
except that this liability shall be satisfied only out of
partnership property.

                             PART IV
               RELATION OF PARTNERS TO ONE ANOTHER

Section 18. Rules Determining Rights and Duties of Partners. The
rights and duties of the partners in relation to the partnership
shall be determined, subject to any agreement between them, by
the following rules:

     (a) Each partner shall be repaid his contributions, whether
by way of capital or advances to the partnership property and
share equally in the profits and surplus remaining after all
liabilities, including those to partners, are satisfied; and must
contribute towards the losses, whether of capital or otherwise,
sustained by the partnership according to his share of the
profits.

     (b) The partnership must indemnify every partner in respect
to payments made and personal liabilities reasonably incurred by
him in the ordinary and proper conduct of its business, or for
the preservation of its business or property.

     (c) A partner, who in aid of the partnership makes any
payment or advance beyond the amount of capital which he agreed
to contribute, shall be paid interest from the date of the
payment or advance.

     (d) A partner shall receive interest on the capital
contributed by him only from the date when repayment should be
made.

     (e) All partners have equal rights in the management and
conduct of the partnership business.

     (f) No partner is entitled to remuneration for acting the
partnership business, except that a surviving partner is entitled
to reasonable compensation for his services in winding up the
partnership affairs.

     (g) No person can become a member of the partnership without
the consent of all the partners.

     (h) Any difference arising as to ordinary matters connected
with the partnership business may be decided by a majority of the
partners; but no act in contravention of any agreement between
the partners may be done rightfully without the consent of all of
the partners.

Section 19. Partnership Books. The partnership books shall be
kept, subject to any agreement between the partners, at the
principal place of business of the partnership, and every partner
shall at all times have access to and may inspect and copy any of
them.

Section 20. Duty of Partners to Render Information. Partners
shall render on demand true and full information of all things
affecting the partnership to any partner or the legal
representative of any deceased partner or partner under legal
disability.

Section 21. Partner Accountable as a Fiduciary. (1) Every partner
must account to the partnership for any benefit, and shall hold
as trustee for it any profits derived by him without the consent
of the other partners from any transaction connected with the
formation, conduct, or liquidation of the partnership or from any
used by him of its property.

     (2) This section applies also to the representatives of a
deceased partner engaged in the liquidation of the affairs of the
partnership as the personal representatives of the last surviving
partner.

Section 22. Right to an Account. Any partner shall have the right
to a formal account as to partnership affairs:

     (a) If he is wrongfully excluded from the partnership
business or possession of its property by his co-partners,

     (b) If the right exists under the terms of any agreement,

     (c) As provided by section 21,

     (d) Whenever other circumstances render it just and
reasonable.

Section 23. Continuation of Partnership Beyond Fixed Term. (1)
When a partnership for a fixed term or particular undertaking is
continued after the termination of such term or particular
undertaking without any express agreement, the rights and duties
of the partners remain the same as they were at such termination,
so far as is consistent with partnership at will.

     (2) A continuation of the business by the partners or such
of them as habitually acted therein during the term, without any
settlement or liquidation of the partnership affairs, is prima
facie evidence of a continuation of the partnership.

                             PART V
                  PROPERTY RIGHTS OF A PARTNER

Section 24. Extent of Property Rights of a Partner. The property
rights of a partner are (1) his rights in specific partnership
partnership property, (2) his interest in the partnership, and
(3) his right to participate in the management.

Section 25. Nature of a Partner's Right in Specific Partnership
Property. (1) A partner is a co-owner with his partners of
specific partnership property holding as a tenant in partnership.

     (2) The incidents of this tenancy are such that:

     (a) A partner, subject to the provision of this Act and to
any agreement between the partners, has an equal right with his
partners to possess specific partnership property for partnership
purposes; but he has no right to possess such property for any
other purpose without the consent of his partners.

     (b) A partner's right in specific partnership property is
not assignable except in connection with the assignment of rights
of all partners in the same property.

     (c) A partner's right to specific partnership property is
not subject to attachment or execution, except on a claim against
the partnership.

     (d) On the death of a partner his right in specific
partnership property vests in the surviving partner or partners,
except where the deceased was the last surviving partner, when
his right in such property vests in his legal representative.
Such surviving partner or partners, or the legal representative
of the last surviving partner, has no right to possess the
partnership property for any but a partnership purpose.

     (e) A partner's right in specific partnership property is
not subject to dower, curtesy, or allowances to widows, heirs or
next of kin.

Section 26. Nature of Partner's Interest in the Partnership. A
partner's interest in the partnership is his share of the profits
and surplus, and the same is personal property.

Section 27. Assignment of Partner's Interest. (1) A conveyance by
a partner of his interest in the partnership does not of itself
dissolve the partnership, nor, as against the other partners in
the absence of agreement, entitle the assignee, during the
continuance of the partnership to interfere in the management or
administration of the partnership business or affairs, or to
require any information or account of partnership transactions,
or to inspect the partnership books; but it merely entitles the
assignees to receive in accordance with his contract the profits
to which the assigning partner would otherwise be entitled.

     (2) In case of a dissolution of the partnership, the
assignee is entitled to receive his assignor's interest and may
require an account from the date only of the last account agreed
to by the partners.

Section 28. Partner's Interest Subject to Charging Order. (1) On
due application to a competent court by any judgment creditor of
a partner, the court which entered the judgment, order or decree,
or any other order of court, may charge the interest of the
debtor partner with repayment of the un-satisfied amount of such
judgment debt with interest thereon; and may then or later
appoint a receiver of his share of the profits, and of any other
money due or to fall due to him in respect of the partnership,
and make all other orders, directions, accounts and inquiries
which the debtor partner might have made, or which the
circumstances of the case may require.

     (2) The interest charged may be redeemed at any time before
foreclosure, or in the case of a sale being directed by the court
may be purchased without thereby causing a dissolution:

     (a) With separate property, by any one or more of the
partners, or

     (b) With partnership property, by any one or more of the
partners with the consent of all the partners whose interests are
not so charged or sold.

     (3) Nothing in this Act shall be held to deprive a partner
of his right, if any, under the exemption laws, as regards his
interest in the partnership.

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