2002 -- S 2769

=======

LC01102

=======

STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2002

____________

A N A C T

RELATING TO PARTNERSHIPS

     Introduced By: Senators Roney, Igliozzi, Paiva-Weed, and McBurney

     Date Introduced: February 07, 2002

     Referred To: Senate Corporations

It is enacted by the General Assembly as follows:

1-1

     SECTION 1. Chapter 7-12 of the General Laws entitled "Partnerships" is hereby repealed

1-2

in its entirety.

1-3

     CHAPTER 12

1-4

Partnerships

1-5

     7-12-1. Provisions in partnership agreements deemed nontestamentary -- No

1-6

partnership agreement in writing, or agreement in writing between copartners, either previously

1-7

or subsequently entered into, are deemed testamentary in character or for that reason invalid or

1-8

unenforceable because the agreement contains a provision: (1) regulating, in the event of the

1-9

death of any of the partners, the transfer, distribution, or other disposition of the assets of the

1-10

partnership, or any of them, to or among the surviving partners or any of them, or their

1-11

successors, or the estate of the deceased partner; or (2) regulating, in the event of death, the use of

1-12

the firm name by the surviving partners, or their successors, or any of them; or (3) regulating the

1-13

destination, distribution, or other disposition of the proceeds of any policy or policies of insurance

1-14

upon the life of any partner; nor is any provision contained in any partnership agreement or in any

1-15

agreement between copartners testamentary in character or for that reason invalid or

1-16

unenforceable, provided, however, that this section shall not be construed to affect the rights of

1-17

the heirs, next of kin, devisees or creditors of a partner who has deceased prior to March 10,

1-18

1932.

1-19

     7-12-2. Death of partner -- Statement delivered to administrator or executor -- In

2-1

case of the death of any person who was at the time of his or her decease a member of any

2-2

copartnership, either general or limited, the surviving partner shall, upon the demand in writing of

2-3

the administrator or executor of the deceased copartner, and within ten (10) days subsequently,

2-4

make out and deliver to the administrator or executor a detailed statement of the assets and

2-5

liabilities of the copartners as they existed at the time of the decease of the copartner, which

2-6

statement shall be verified by the oath of the surviving copartner.

2-7

     7-12-3. Examination of books and property by representative of deceased partner --

2-8

The administrator or executor may enter upon the premises and examine the books and affairs of

2-9

the copartnership and take an inventory of the personal property in which his or her intestate or

2-10

testate may have had an interest at the time of his or her decease.

2-11

     7-12-4. Separate composition with creditors on dissolution of partnership --

2-12

Whenever any copartnership is dissolved, any person who was embraced in the copartnership

2-13

may make a separate composition or compromise with any one of or all the creditors of the

2-14

copartnership.

2-15

     7-12-5. Separate composition as full discharge of partner -- A composition or

2-16

compromise is a full and effectual discharge to the debtor making the composition or

2-17

compromise, of the whole of the debt, and is taken and considered in reference to the other

2-18

copartners as actual payment of the debtor's proportion of the debt, whether the full amount of his

2-19

or her proportion of the debt is actually paid or not.

2-20

     7-12-6. Payment by partner in excess of his or her proportion -- In case an amount

2-21

exceeding his or her proportion is actually paid, it is taken and considered as payment of the

2-22

amount of debt actually paid.

2-23

     7-12-7. Insolvency or absconding of partner -- A composition or compromise in no

2-24

way affects the right of the other copartners or any of them to call on the person making the

2-25

compromise for any sum beyond the person's original portion of the debt, if in consequence of the

2-26

insolvency, inability to pay or absconding of any one of the copartners, the person so

2-27

compromising becomes liable to pay more than his or her proportion of the debt.

2-28

     7-12-8. Memorandum exonerating partner on separate composition -- Every debtor

2-29

making a composition or compromise takes from the creditor with whom he or she may make the

2-30

composition or compromise a note or memorandum in writing, exonerating him or her from all

2-31

individual liability incurred by reason of the connection with the copartnership The note or

2-32

memorandum may be given in evidence by the debtor under the general issue, in bar of the

2-33

creditor's right of recovery against him or her.

2-34

     7-12-9. Partners not discharged by separate composition -- Defenses to creditor's

3-1

action -- A composition or compromise is not to be so construed as to discharge the other

3-2

copartners, except as provided in sections 7-12-5 and 7-12-6; nor does it impair the right of the

3-3

creditor to proceed against the members of the copartnership who have not been discharged The

3-4

members of the partnership so proceeded against are permitted to set off any demand against the

3-5

creditor which could have been set off had the suit been against all the individuals composing the

3-6

firm They may avail themselves of any defense that would have been available had not this

3-7

chapter been passed, except that they shall not set up the discharge of one individual as a

3-8

discharge of all the other copartners, unless it appears that all were intended to be discharged.

3-9

     7-12-10. Application to joint debtors -- The provisions of sections 7-12-4 -- 7-12-9 in

3-10

reference to copartners extend to joint debtors who may individually compound or compromise

3-11

for their joint indebtedness, with the like effect to creditors and to joint debtors of the person

3-12

compromising as is provided in this section in reference to copartners.

3-13

     7-12-11. Limited partnership law unaffected -- The provisions of this chapter shall not

3-14

be deemed or taken to affect any of the provisions of chapter 13 of this title, entitled "Limited

3-15

Partnerships."

3-16

     7-12-12. Short title -- Sections 7-12-12 -- 7-12-55 may be cited as the "Uniform

3-17

Partnership Act".

3-18

     7-12-13. Definitions -- In sections 7-12-12 -- 7-12-59:

3-19

      (1) "Bankrupt" includes bankrupt under title 11 of the United States Code (Bankruptcy)

3-20

or insolvent under any state insolvent act.

3-21

      (2) "Business" includes every trade, occupation, or profession.

3-22

      (3) "Conveyance" includes every assignment, lease, mortgage, or encumbrance.

3-23

      (4) "Court" includes every court and judge having jurisdiction in the case.

3-24

      (5) "Person" includes individuals, partnerships, corporations, and other associations.

3-25

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

3-26

      (7) "Registered limited liability partnership" means a partnership formed pursuant to an

3-27

agreement governed by the laws of this state, registered under section 7-12-56 and in compliance

3-28

with section 7-12-58.

3-29

      (8) "Foreign registered limited liability partnership" means a registered limited liability

3-30

partnership or a limited liability partnership formed pursuant to an agreement governed by the

3-31

laws of another jurisdiction and registered under the laws of that jurisdiction.

3-32

     7-12-14. Interpretation of knowledge and notice -- (a) A person has "knowledge" of a

3-33

fact within the meaning of sections 7-12-12 -- 7-12-55 not only when he or she has actual

3-34

knowledge of it, but also when he or she has knowledge of any other facts that in the

4-1

circumstances show bad faith.

4-2

      (b) A person has "notice" of a fact within the meaning of sections 7-12-12 -- 7-12-55

4-3

when the person who claims the benefit of the notice:

4-4

      (1) States the fact to the person; or

4-5

      (2) Delivers through the mail, or by other means of communication, a written statement

4-6

of the fact to the person or to a proper person at his or her place of business or residence.

4-7

     7-12-15. Rules of construction -- (a) The rule that statutes in derogation of the common

4-8

law are to be strictly construed has no application to sections 7-12-12 -- 7-12-55.

4-9

      (b) The law of estoppel applies under sections 7-12-12 -- 7-12-55.

4-10

      (c) The law of agency applies under sections 7-12-12 -- 7-12-55.

4-11

      (d) Sections 7-12-12 -- 7-12-55 shall be so interpreted and construed as to effect their

4-12

general purpose to make uniform the law of those states which enact them.

4-13

      (e) Sections 7-12-12 -- 7-12-55 shall not be construed so as to impair the obligations of

4-14

any contract existing on October 1, 1957, nor to affect any action or proceedings or right accrued

4-15

before October 1, 1957.

4-16

     7-12-16. Rules for cases not provided for -- In any case not provided for in sections 7-

4-17

12-12 -- 7-12-55 the rules of law and equity, including the law merchant, govern.

4-18

     7-12-17. Partnership defined -- (a) A partnership is an association of two (2) or more

4-19

persons to carry on as co-owners a business for profit, and includes a registered limited liability

4-20

partnership.

4-21

      (b) Any association formed under any other statute of this state, or any statute adopted

4-22

by authority, other than the authority of the state, is not a partnership under sections 7-12-12 -- 7-

4-23

12-59, unless the association would have been a partnership in this state prior to May 6, 1957; but

4-24

sections 7-12-12 -- 7-12-59 apply to limited partnerships except insofar as the statutes relating to

4-25

partnerships are inconsistent with these provisions.

4-26

     7-12-18. Rules for determining the existence of a partnership -- In determining

4-27

whether a partnership exists, these rules apply:

4-28

      (1) Except as provided by section 7-12-27, persons who are not partners as to each other

4-29

are not partners as to third persons.

4-30

      (2) Joint tenancy, tenancy in common, tenancy by the entireties, joint property, common

4-31

property, or part ownership does not of itself establish a partnership, whether the co-owners do or

4-32

do not share any profits made by the use of the property.

4-33

      (3) The sharing of gross returns does not of itself establish a partnership, whether or not

4-34

the persons sharing them have a joint or common right or interest in any property from which the

5-1

returns are derived.

5-2

      (4) The receipt by a person of a share of the profits of a business is prima facie evidence

5-3

that he or she is a partner in the business, but no such inference is drawn if profits were received

5-4

in payment:

5-5

      (i) As a debt by installments or otherwise;

5-6

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

5-7

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

5-8

      (iv) As interest on a loan, though the amount of payment vary with the profits of the

5-9

business;

5-10

      (v) As the consideration for the sale of a good will of a business or other property by

5-11

installments or otherwise.

5-12

     7-12-19. Partnership property -- (a) All property originally brought into the partnership

5-13

stock or subsequently acquired by purchase or otherwise, on account of the partnership, is

5-14

partnership property.

5-15

      (b) Unless the contrary intention appears, property acquired with partnership funds is

5-16

partnership property.

5-17

      (c) Any estate in real property may be acquired in the partnership name. Title so

5-18

acquired can be conveyed only in the partnership name.

5-19

      (d) A conveyance to a partnership in the partnership name, though without words of

5-20

inheritance, passes the entire estate of the grantor unless a contrary intent appears.

5-21

     7-12-20. Partner agent of partnership as to partnership business -- (a) Every partner

5-22

is an agent of the partnership for the purpose of its business, and the act of every partner,

5-23

including the execution in the partnership name of any instrument, for apparently carrying on in

5-24

the usual way the business of the partnership of which he or she is a member, binds the

5-25

partnership, unless the partner so acting has in fact no authority to act for the partnership in the

5-26

particular matter, and the person with whom he or she is dealing has knowledge of the fact that he

5-27

or she has no authority.

5-28

      (b) An act of a partner which is not apparently for the carrying on of the business of the

5-29

partnership in the usual way does not bind the partnership unless authorized by the other partners.

5-30

      (c) Unless authorized by the other partners or unless they have abandoned the business,

5-31

one or more but less than all the partners have no authority to:

5-32

      (1) Assign the partnership property in trust for creditors or on the assignee's promise to

5-33

pay the debts of the partnership;

5-34

      (2) Dispose of the good will of the business;

6-1

      (3) Do any other act which would make it impossible to carry on the ordinary business of

6-2

a partnership;

6-3

      (4) Confess a judgment;

6-4

      (5) Submit a partnership claim or liability to arbitration or reference.

6-5

      (d) No act of a partner in contravention of a restriction on authority shall bind the

6-6

partnership to persons having knowledge of the restriction.

6-7

     7-12-21. Conveyance of real property of the partnership -- (a) Where title to real

6-8

property is in the partnership name, any partner may convey title to the property by a conveyance

6-9

executed in the partnership name; but the partnership may recover the property unless the

6-10

partner's act binds the partnership under the provisions of section 7-12-20(a), or unless the

6-11

property has been conveyed by the grantee or a person claiming through the grantee to a holder

6-12

for value without knowledge that the partner, in making the conveyance, has exceeded his or her

6-13

authority.

6-14

      (b) Where title to real property is in the name of the partnership, a conveyance executed

6-15

by a partner, in his or her own name, passes the equitable interest of the partnership, provided the

6-16

act is one within the authority of the partner under the provisions of subsection (a) of section 7-

6-17

12-20.

6-18

      (c) Where title to real property is in the name of one or more but not all the partners, and

6-19

the record does not disclose the right of the partnership, the partners in whose name the title

6-20

stands may convey title to the property, but the partnership may recover the property if the

6-21

partners' act does not bind the partnership under the provisions of section 7-12-20(a) unless the

6-22

purchaser or his or her assignee, is a holder for value, without knowledge.

6-23

      (d) Where the title to real property is in the name of one or more or all of the partners, or

6-24

in a third person in trust for the partnership, a conveyance executed by a partner in the partnership

6-25

name, or in his or her own name, passes the equitable interest of the partnership, provided the act

6-26

is one within the authority of the partner under the provision of section 7-12-20(a).

6-27

      (e) Where the title to real property is in the names of all the partners a conveyance

6-28

executed by all the partners passes all their rights in the property.

6-29

     7-12-22. Partnership bound by admission of partner -- An admission or representation

6-30

made by any partner concerning partnership affairs within the scope of his or her authority as

6-31

conferred by sections 7-12-12 -- 7-12-55 is evidence against the partnership.

6-32

     7-12-23. Partnership charged with knowledge of or notice to partner -- Notice to any

6-33

partner of any matter relating to partnership affairs, and the knowledge of the partners acting in

6-34

the particular matter, acquired while a partner or then present to his or her mind, and the

7-1

knowledge of any other partner who reasonably could and should have communicated it to the

7-2

acting partner, operate as notice to or knowledge of the partnership, except in the case of a fraud

7-3

on the partnership committed by or with the consent of that partner.

7-4

     7-12-24. Partnership bound by partner's wrongful act -- Where, by any wrongful act

7-5

or omission of any partner acting in the ordinary course of the business of the partnership or with

7-6

the authority of his or her copartners, loss or injury is caused to any person, not being a partner in

7-7

the partnership, or any penalty is incurred, the partnership is liable for the loss, injury, or penalty

7-8

to the same extent as the partner acting or omitting to act.

7-9

     7-12-25. Partnership bound by partner's breach of trust -- The partnership is bound to

7-10

make good the loss:

7-11

      (1) Where one partner acting within the scope of his or her apparent authority receives

7-12

money or property of a third person and misapplies it; and

7-13

      (2) Where the partnership in the course of its business receives money or property of a

7-14

third person and the money or property so received is misapplied by any partner while it is in the

7-15

custody of the partnership.

7-16

     7-12-26. Nature of partner's liability -- (a) All partners are liable, except as provided in

7-17

subsection (b):

7-18

      (1) Jointly and severally for everything chargeable to the partnership under sections 7-

7-19

12-24 and 7-12-25.

7-20

      (2) Jointly for all other debts and obligations of the partnership; but any partner may

7-21

enter into a separate obligation to perform a partnership contract.

7-22

      (b) Subject to subsection (c), a partner in a registered limited liability partnership is not

7-23

liable directly or indirectly (including by way of indemnification, contribution, assessment or

7-24

otherwise) for debts, obligations, and liabilities of or chargeable to the partnership whether in tort,

7-25

contract or otherwise, arising while the partnership is a registered limited liability partnership.

7-26

      (c) Subsection (b) does not affect the individual liability of a partner in a registered

7-27

limited liability partnership for his or her own negligence, wrongful acts or misconduct, or that of

7-28

any person under that partner's direct supervision and control other than in an administrative

7-29

capacity.

7-30

      (d) A partner in a registered limited liability partnership is not a proper party in his or her

7-31

individual capacity to a proceeding by or against a registered limited liability partnership, the

7-32

object of which is to recover damages or enforce the obligations of the registered limited liability

7-33

partnership, unless the partner is personally liable under subsection (c).

7-34

      (e) Notwithstanding any other provisions of this section, the personal liability of a

8-1

partner in a limited liability partnership engaged in the rendering of professional services is not

8-2

less than or greater than the personal liability of a shareholder of a professional corporation

8-3

organized under chapter 5.1 of this title engaged in the rendering of the same professional

8-4

services.

8-5

     7-12-27. Partner by estoppel -- (a) When a person, by words spoken or written or by

8-6

conduct, represents him or herself, or consents to another representing him or her to any one, as a

8-7

partner in an existing partnership or with one or more persons not actual partners, he or she is

8-8

liable to any person to whom the representation has been made, who has, on the faith of the

8-9

representation, given credit to the actual or apparent partnership, and if he or she has made a

8-10

representation or consented to its being made in a public manner he or she is liable to the person,

8-11

whether the representation has or has not been made or communicated to the person giving credit

8-12

by or with the knowledge of the apparent partner making the representation or consenting to its

8-13

being made.

8-14

      (1) When a partnership liability results, he or she is liable as though he or she were an

8-15

actual member of the partnership.

8-16

      (2) When no partnership liability results, he or she is liable jointly with the other persons,

8-17

if any, so consenting to the contract or representation as to incur liability, otherwise separately.

8-18

      (b) When a person is represented to be a partner in an existing partnership, or with one or

8-19

more persons not actual partners, he or she is an agent of the persons consenting to the

8-20

representation to bind them to the same extent and in the same manner as though he or she were a

8-21

partner in fact, with respect to persons who rely on the representation. Where all the members of

8-22

the existing partnership consent to the representation, a partnership act or obligation results; but

8-23

in all other cases it is the joint act or obligation of the person acting and the persons consenting to

8-24

the representation.

8-25

     7-12-28. Liability of incoming partner -- A person admitted as a partner into an existing

8-26

partnership is liable for all the obligations of the partnership arising before his or her admission as

8-27

though he or she had been a partner when the obligations were incurred, except that this liability

8-28

is satisfied only out of partnership property.

8-29

     7-12-29. Rules determining rights and duties of partners -- The rights and duties of

8-30

the partners in relation to the partnership are determined, subject to any agreement between them,

8-31

by the following rules:

8-32

      (1) Each partner is repaid his or her contributions, whether by way of capital or advances

8-33

to the partnership property and shares equally in the profits and surplus remaining after all

8-34

liabilities, including those to partners, are satisfied; and except as provided in section 7-12-26(b),

9-1

each partner must contribute toward the losses, whether of capital or otherwise, sustained by the

9-2

partnership according to his or her share in the profits.

9-3

      (2) The partnership must indemnify every partner in respect of payments made and

9-4

personal liabilities reasonably incurred by him or her in the ordinary and proper conduct of its

9-5

business, or for the preservation of its business or property.

9-6

      (3) A partner, who in aid of the partnership makes any payment or advance beyond the

9-7

amount of capital which he or she agreed to contribute, is paid interest from the date of the

9-8

payment or advance.

9-9

      (4) A partner receives interest on the capital contributed by him or her only from the date

9-10

when repayment should be made.

9-11

      (5) All partners have equal rights in the management and conduct of the partnership

9-12

business.

9-13

      (6) No partner is entitled to remuneration for acting in the partnership business, except

9-14

that a surviving partner is entitled to reasonable compensation for his or her services in winding

9-15

up the partnership affairs.

9-16

      (7) No person can become a member of a partnership without the consent of all the

9-17

partners.

9-18

      (8) Any difference arising as to ordinary matters connected with the partnership business

9-19

may be decided by a majority of the partners; but no act in contravention of any agreement

9-20

between the partners may be done rightfully without the consent of all the partners.

9-21

     7-12-30. Partnership books -- The partnership books are kept, subject to any agreement

9-22

between the partners, at the principal place of business of the partnership, and every partner shall

9-23

at all times have access to and may inspect and copy any of them.

9-24

     7-12-31. Duty of partners to render information -- Partners shall render on demand

9-25

true and full information of all things affecting the partnership to any partner or the legal

9-26

representative of any deceased partner or partner under legal disability.

9-27

     7-12-31.1. Nature of business -- (a) Except as provided in subsection (b), a registered

9-28

limited liability partnership or a foreign registered limited liability partnership may conduct any

9-29

lawful business in this state.

9-30

      (b) (1) A registered limited liability partnership or a foreign registered limited liability

9-31

partnership may not render professional services as defined in section 7-5.1-2, except that a

9-32

registered limited liability partnership may engage in the practice of public accountancy pursuant

9-33

to chapter 3 of title 5 or in the practice of law pursuant to Article II, III, IV, and V of the Supreme

9-34

Court rules.

10-1

      (2) A registered limited liability partnership or foreign registered limited liability

10-2

partnership that is engaged in the practice of public accountancy in this state is subject to the laws

10-3

and regulations of this state governing the practice of public accountancy by partnerships.

10-4

Nothing in this section affects the authority of the Rhode Island board of accountancy to regulate

10-5

the practice of public accountancy.

10-6

      (3) A registered limited liability partnership or foreign registered limited liability

10-7

partnership that is engaged in the practice of law in this state is subject to the laws and regulations

10-8

of this state governing the practice of law by partnerships. Nothing in this section affects the

10-9

authority of the Rhode Island Supreme Court to regulate the practice of law.

10-10

     7-12-32. Partner accountable as a fiduciary -- (a) Every partner must account to the

10-11

partnership for any benefit, and hold as trustee for it any profits derived by him or her without the

10-12

consent of the other partners from any transaction connected with the formation, conduct, or

10-13

liquidation of the partnership or from any use by him or her of its property.

10-14

      (b) This section applies also to the representatives of a deceased partner engaged in the

10-15

liquidation of the affairs of the partnership as the personal representatives of the last surviving

10-16

partner.

10-17

     7-12-33. Right to an account -- Any partner has the right to a formal account as to

10-18

partnership affairs:

10-19

      (1) If he or she is wrongfully excluded from the partnership business or possession of its

10-20

property by his or her copartners.

10-21

      (2) If the right exists under the terms of any agreement.

10-22

      (3) As provided by section 7-12-32.

10-23

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

10-24

     7-12-34. Continuation of partnership beyond fixed term -- (a) When a partnership for

10-25

a fixed term or particular undertaking is continued after the termination of the term or particular

10-26

undertaking without any express agreement, the rights and duties of the partners remain the same

10-27

as they were at the termination, insofar as is consistent with a partnership at will.

10-28

      (b) A continuation of the business by the partners or those of them that habitually acted

10-29

in the partnership during the term, without any settlement or liquidation of the partnership affairs,

10-30

is prima facie evidence of a continuation of the partnership.

10-31

     7-12-35. Extent of property rights of a partner -- The property rights of a partner are:

10-32

      (1) His or her rights in specific partnership property;

10-33

      (2) His or her interest in the partnership; and

10-34

      (3) His or her rights to participate in the management.

11-1

     7-12-36. Nature of a partner's right in specific partnership property -- (a) A partner

11-2

is co-owner with his or her partners of specific partnership property holding as a tenant in

11-3

partnership.

11-4

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

11-5

      (1) A partner, subject to the provisions of sections 7-12-12 -- 7-12-55 and to any

11-6

agreement between the partners, has an equal right with his or her partners to possess specific

11-7

partnership property for partnership purposes; but he or she has no right to possess the property

11-8

for any other purpose without the consent of his or her partners.

11-9

      (2) A partner's right in specific partnership property is not assignable except in

11-10

connection with the assignment of rights of all the partners in the same property.

11-11

      (3) A partner's right in specific partnership property is not subject to attachment or

11-12

execution, except on a claim against the partnership. When partnership property is attached for a

11-13

partnership debt the partners, or any of them, or the representatives of a deceased partner, cannot

11-14

claim any right under the exemption laws.

11-15

      (4) On the death of a partner his or her right in specific partnership property vests in the

11-16

surviving partner or partners, except where the deceased was the last surviving partner, when his

11-17

or her right in the property vests in his or her legal representative. The surviving partner or

11-18

partners, or the legal representative of the last surviving partner, has no right to possess the

11-19

partnership property for any but a partnership purpose.

11-20

      (5) A partner's right in specific partnership property is not subject to dower, curtesy, or

11-21

allowances to widows, heirs, or next of kin.

11-22

     7-12-37. Nature of partner's interest in the partnership -- A partner's interest in the

11-23

partnership is his or her share of the profits and surplus, and his or her share of the profits and

11-24

surplus is personal property.

11-25

     7-12-38. Assignment of partner's interest -- (a) A conveyance by a partner of his or her

11-26

interest in the partnership does not of itself dissolve the partnership, nor, as against the other

11-27

partners in the absence of agreement, entitle the assignee, during the continuance of the

11-28

partnership, to interfere in the management or administration of the partnership business or

11-29

affairs, to require any information or account of partnership transactions, or to inspect the

11-30

partnership book. It merely entitles the assignee to receive in accordance with his or her contract

11-31

the profits to which the assigning partner would otherwise be entitled.

11-32

      (b) In case of a dissolution of the partnership, the assignee is entitled to receive his or her

11-33

assignor's interest and may require an account from the date only of the last account agreed to by

11-34

all the partners.

12-1

     7-12-39. Partner's interest subject to charging order -- (a) On due application to the

12-2

superior court by any judgment creditor of a partner, the court may charge the interest of the

12-3

debtor partner with payment of the unsatisfied amount of the judgment debt with interest on it;

12-4

and may then or later appoint a receiver of his or her share of the profits, and of any other money

12-5

due or to fall due to him or her in respect of the partnership, and make all other orders, directions,

12-6

accounts, and inquiries which the debtor partner might have made, or which the circumstances of

12-7

the case require.

12-8

      (b) The interest charged may be redeemed at any time before foreclosure, or in case of a

12-9

sale being directed by the court may be purchased without causing a dissolution:

12-10

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

12-11

      (2) With partnership property, by any one or more of the partners with the consent of all

12-12

the partners whose interests are not so charged or sold.

12-13

      (c) Nothing in sections 7-12-12 -- 7-12-55 deprives a partner of his or her right, if any,

12-14

under the exemption laws, regarding his interest in the partnership.

12-15

     7-12-40. Dissolution defined -- The dissolution of a partnership is the change in the

12-16

relation of the partners caused by any partner ceasing to be associated in the carrying on as

12-17

distinguished from the winding up of the business.

12-18

     7-12-41. Partnership not terminated by dissolution -- On dissolution the partnership is

12-19

not terminated, but continues until the winding up of partnership affairs is completed.

12-20

     7-12-42. Causes of dissolution -- Dissolution is caused:

12-21

      (1) Without violation of the agreement between the partners,

12-22

      (i) By the termination of the definite term or particular undertaking specified in the

12-23

agreement;

12-24

      (ii) By the express will of any partner when no definite term or particular undertaking is

12-25

specified;

12-26

      (iii) By the express will of all the partners who have not assigned their interests or

12-27

suffered them to be charged for their separate debts, either before or after the termination of any

12-28

specified term or particular undertaking.

12-29

      (iv) By the expulsion of any partner from the business bona fide in accordance with the

12-30

power conferred by the agreement between the partners.

12-31

      (2) In contravention of the agreement between the partners, where the circumstances do

12-32

not permit a dissolution under any other provision of this section, by the express will of any

12-33

partner at any time;

12-34

      (3) By any event which makes it unlawful for the business of the partnership to be

13-1

carried on or for the members to carry it on in partnership;

13-2

      (4) By the death of any partner;

13-3

      (5) By the bankruptcy of any partner or the partnership;

13-4

      (6) By decree of court under section 7-12-43.

13-5

     7-12-43. Dissolution by decree of court -- (a) On application by or for a partner, the

13-6

court shall decree a dissolution whenever:

13-7

      (1) A partner has been declared mentally incompetent in any judicial proceeding or is

13-8

shown to be of unsound mind;

13-9

      (2) A partner becomes in any other way incapable of performing his or her part of the

13-10

partnership contract;

13-11

      (3) A partner has been guilty of any conduct that tends to affect prejudicially the carrying

13-12

on of the business;

13-13

      (4) A partner willfully or persistently commits a breach of the partnership agreement, or

13-14

otherwise so conducts him or herself in matters relating to the partnership business that it is not

13-15

reasonably practicable to carry on the business in partnership with him or her;

13-16

      (5) The business of the partnership can only be carried on at a loss;

13-17

      (6) Other circumstances render a dissolution equitable.

13-18

      (b) On the application of the purchaser of a partner's interest under sections 7-12-38 and

13-19

7-12-39, the court shall decree a dissolution:

13-20

      (1) After the termination of the specified term or particular undertaking;

13-21

      (2) At any time if the partnership was a partnership at will when the interest was

13-22

assigned or when the charging order was issued.

13-23

     7-12-44. General effect of dissolution on authority of partner -- Except insofar as is

13-24

necessary to wind up partnership affairs or to complete transactions begun but not then finished,

13-25

dissolution terminates all authority of any partner to act for the partnership,

13-26

      (1) Regarding the partners;

13-27

      (i) When the dissolution is not by the act, bankruptcy, or death of a partner; or

13-28

      (ii) When the dissolution is by the act, bankruptcy, or death of a partner, in cases where

13-29

section 7-12-45 so requires.

13-30

      (2) With respect to persons not partners, as declared in section 7-12-46.

13-31

     7-12-45. Right of partner to contribution from copartners after dissolution -- Where

13-32

the dissolution is caused by the act, death, or bankruptcy of a partner, each partner is liable to his

13-33

or her copartners for his or her share of any liability created by any partner acting for the

13-34

partnership as if the partnership had not been dissolved, unless:

14-1

      (1) The dissolution being by act of any partner, the partner acting for the partnership had

14-2

knowledge of the dissolution, or

14-3

      (2) The dissolution being by the death or bankruptcy of a partner, the partner acting for

14-4

the partnership had knowledge or notice of the death or bankruptcy, or

14-5

      (3) The liability is for a debt or obligation for which the partner is not liable as provided

14-6

in section 7-12-26(b).

14-7

     7-12-46. Power of partner to bind partnership to third persons after dissolution --

14-8

(a) After dissolution a partner can bind the partnership except as provided in subsection (c), by:

14-9

      (1) Any act appropriate for winding up partnership affairs or completing transactions

14-10

unfinished at dissolution;

14-11

      (2) Any transaction which would bind the partnership if dissolution had not taken place,

14-12

provided the other party to the transaction,

14-13

      (i) Had extended credit to the partnership prior to dissolution and had no knowledge or

14-14

notice of the dissolution; or

14-15

      (ii) Though he or she had not so extended credit, had nevertheless known of the

14-16

partnership prior to dissolution, and, having no knowledge or notice of dissolution, the fact of

14-17

dissolution had not been advertised in a newspaper of general circulation in the place (or in each

14-18

place if more than one) at which the partnership business was regularly carried on.

14-19

      (b) The liability of a partner under subsection (a)(2) shall be satisfied out of partnership

14-20

assets alone, when the partner had been, prior to dissolution,

14-21

      (1) Unknown as a partner to the person with whom the contract is made; and

14-22

      (2) So far unknown and inactive in partnership affairs that the business reputation of the

14-23

partnership could not be said to have been in any degree due to his or her connection with it.

14-24

      (c) The partnership is in no case bound by any act of a partner after dissolution where:

14-25

      (1) The partnership is dissolved because it is unlawful to carry on the business, unless

14-26

the act is appropriate for winding up partnership affairs;

14-27

      (2) The partner has become bankrupt; or

14-28

      (3) The partner has no authority to wind up partnership affairs; except by a transaction

14-29

with one who:

14-30

      (i) Had extended credit to the partnership prior to dissolution and had no knowledge or

14-31

notice of his or her want of authority; or

14-32

      (ii) Had not extended credit to the partnership prior to dissolution, and, having no

14-33

knowledge or notice of his or her want of authority, the fact of his or her want of authority has not

14-34

been advertised in the manner provided for advertising the fact of dissolution in subsection

15-1

(a)(2)(ii).

15-2

      (d) Nothing in this section affects the liability under section 7-12-27 of any person who

15-3

after dissolution represents him or herself or consents to another representing him or her as a

15-4

partner in a partnership engaged in carrying on business.

15-5

     7-12-47. Effect of dissolution on partner's existing liability -- (a) The dissolution of the

15-6

partnership does not of itself discharge the existing liability of any partner.

15-7

      (b) A partner is discharged from any existing liability upon dissolution of the partnership

15-8

by an agreement to that effect between him or herself, the partnership creditor, and the person or

15-9

partnership continuing the business. An agreement may be inferred from the course of dealing

15-10

between the creditor having knowledge of the dissolution and the person or partnership

15-11

continuing the business.

15-12

      (c) Where a person agrees to assume the existing obligations of a dissolved partnership,

15-13

the partners whose obligations have been assumed are discharged from any liability to any

15-14

creditor of the partnership who, knowing of the agreement, consents to a material alteration in the

15-15

nature or time of payment of the obligations.

15-16

      (d) The individual property of a deceased partner is liable for those obligations of the

15-17

partnership incurred while he or she was a partner and for which he or she is liable under section

15-18

7-12-26, but subject to the prior payment of his or her separate debts.

15-19

     7-12-48. Right to wind up -- Unless otherwise agreed, the partners who have not

15-20

wrongfully dissolved the partnership or the legal representative of the last surviving partner, not

15-21

bankrupt, has the right to wind up the partnership affairs; provided, that any partner, his or her

15-22

legal representative or his or her assignee may obtain winding up by the court upon cause shown.

15-23

     7-12-49. Rights of partners to application of partnership property -- (a) When

15-24

dissolution is caused in any way, except in contravention of the partnership agreement, each

15-25

partner, as against his or her copartners and all persons claiming through them in respect of their

15-26

interests in the partnership, unless otherwise agreed, may have the partnership property applied to

15-27

discharge its liabilities, and the surplus applied to pay in cash the net amount owing to the

15-28

respective partners. But if dissolution is caused by the expulsion of a bona fide partner under the

15-29

partnership agreement, and if the expelled partner is discharged from all partnership liabilities,

15-30

either by payment or agreement under section 7-12-47(2), he or she receives in cash only the net

15-31

amount due him or her from the partnership.

15-32

      (b) When dissolution is caused in contravention of the partnership agreement the rights

15-33

of the partners are as follows:

15-34

      (1) Each partner who has not wrongfully caused dissolution has,

16-1

      (i) All the rights specified in subsection (a), and

16-2

      (ii) The right, as against each partner who has wrongfully caused the dissolution to

16-3

damages for breach of the agreement.

16-4

      (2) The partners who have not wrongfully caused the dissolution, if they all desire to

16-5

continue the business in the same name, either by themselves or jointly with others, may do so,

16-6

during the agreed term for the partnership and for that purpose may possess the partnership

16-7

property, provided they secure the payment by bond approved by the court, or pay to any partner

16-8

who has wrongfully caused the dissolution, the value of his or her interest in the partnership at the

16-9

dissolution, less any damages recoverable under subsection (b)(1)(ii), and in like manner

16-10

indemnify him or her against all present or future partnership liabilities.

16-11

      (3) A partner who has wrongfully caused the dissolution has:

16-12

      (i) If the business is not continued under the provisions of subsection (b)(2) all the rights

16-13

of a partner under subsection (a); subject to subsection (b)(1)(ii).

16-14

      (ii) If the business is continued under subsection (b)(2) the right as against his or her

16-15

copartners and all claiming through them as to their interests in the partnership, to have the value

16-16

of his or her interest in the partnership, less any damages caused to his or her copartners by the

16-17

dissolution, ascertained and paid to him or her in cash, or the payment secured by bond approved

16-18

by the court, and to be released from all existing liabilities of the partnership; but in ascertaining

16-19

the value of the partner's interest the value of the good will of the business is not considered.

16-20

     7-12-50. Rights where partnership is dissolved for fraud or misrepresentation --

16-21

Where a partnership contract is rescinded on the ground of the fraud or misrepresentation of one

16-22

of the parties to the contract, the party entitled to rescind is, without prejudice to any other right,

16-23

entitled to:

16-24

      (1) A lien on, or right of retention of, the surplus of the partnership property, after

16-25

satisfying the partnership liabilities to third persons, for any sum of money paid by him or her for

16-26

the purchase of an interest in the partnership and for any capital or advances contributed by him;

16-27

and

16-28

      (2) Stand, after all liabilities to third persons have been satisfied, in the place of the

16-29

creditors of the partnership for any payments made by him or her as to the partnership liabilities;

16-30

and

16-31

      (3) Indemnification by the person guilty of the fraud or making the representation against

16-32

all debts and liabilities of the partnership.

16-33

     7-12-51. Rules for distribution -- In settling accounts between the partners after

16-34

dissolution, the following rules are observed, subject to any agreement to the contrary:

17-1

      (1) The assets of the partnership are:

17-2

      (i) The partnership property;

17-3

      (ii) The contributions of the partners specified in subdivision (4).

17-4

      (2) The liabilities of the partnership rank in order of payment, as follows:

17-5

      (i) Those owing to creditors other than partners;

17-6

      (ii) Those owing to partners other than for capital and profits;

17-7

      (iii) Those owing to partners in respect of capital;

17-8

      (iv) Those owing to partners in respect of profits.

17-9

      (3) The assets are applied in the order of their declaration in subdivision (1) to the

17-10

satisfaction of the liabilities.

17-11

      (4) Except as provided in section 7-12-26(b), the partners shall contribute, as provided

17-12

by section 7-12-29(1) the amount necessary to satisfy the liabilities; but if any, but not all, of the

17-13

partners are insolvent, or not being subject to process, refuse to contribute, the other partners shall

17-14

contribute their share of the liabilities, and, in the relative proportions in which they share the

17-15

profits, the additional amount necessary to pay the liabilities.

17-16

      (5) An assignee for the benefit of creditors of any person appointed by the court has the

17-17

right to enforce the contributions specified in subdivision (4).

17-18

      (6) Any partner or his or her legal representative has the right to enforce the

17-19

contributions specified in subdivision (4), to the extent of the amount which he or she has paid in

17-20

excess of his or her share.

17-21

      (7) The individual property of a deceased partner is liable for the contributions specified

17-22

in subdivision (4).

17-23

      (8) When partnership property and the individual properties of the partners are in

17-24

possession of a court for distribution, partnership creditors have priority on partnership property

17-25

and separate creditors on individual property, saving the rights of lien or secured creditors as

17-26

previously.

17-27

      (9) Where a partner has become bankrupt or his or her estate is insolvent the claims

17-28

against his or her separate property rank in the following order:

17-29

      (i) Those owing to separate creditors;

17-30

      (ii) Those owing to partnership creditors;

17-31

      (iii) Those owing to partners by way of contribution.

17-32

     7-12-52. Liability of persons continuing the business in certain cases -- (a) When any

17-33

new partner is admitted into an existing partnership, or when any partner retires and assigns (or

17-34

the representative of the deceased partner assigns) his or her rights in partnership property to two

18-1

(2) or more of the partners, or to one or more of the partners, and one or more third persons, if the

18-2

business is continued without liquidation of the partnership affairs, creditors of the first or

18-3

dissolved partnership are also creditors of the partnership continuing the business.

18-4

      (b) When all but one partner retire and assign (or the representative of the deceased

18-5

partner assigns) their rights in partnership property to the remaining partner, who continues the

18-6

business without liquidation of partnership affairs, either alone or with others, creditors of the

18-7

dissolved partnership are also creditors of the person or partnership continuing the business.

18-8

      (c) When any partner retires or dies and the business of the dissolved partnership is

18-9

continued as described in subsections (a) and (b), with the consent of the retired partners or the

18-10

representative of the deceased partner, but without any assignment of his or her right in

18-11

partnership property, rights of creditors of the dissolved partnership and of the creditors of the

18-12

person or partnership continuing the business are as if the assignment had been made.

18-13

      (d) When all the partners or their representatives assign their rights in partnership

18-14

property to one or more third persons who promise to pay the debts and who continue the

18-15

business of the dissolved partnerships, creditors of the dissolved partnerships are also creditors of

18-16

the person or partnership continuing the business.

18-17

      (e) When any partner wrongfully causes a dissolution and the remaining partners

18-18

continue the business under the provision of section 7-12-49(b)(2), either alone or with others,

18-19

and without liquidation of the partnership affairs, creditors of the dissolved partnership are also

18-20

creditors of the person or partnership continuing the business.

18-21

      (f) When a partner is expelled and the remaining partners continue the business either

18-22

alone or with others, without liquidation of the partnership affairs, creditors of the dissolved

18-23

partnership are also creditors of the person or partnership continuing the business.

18-24

      (g) The liability of a third person becoming a partner in the partnership continuing the

18-25

business, under this section, to the creditors of the dissolved partnership is satisfied out of

18-26

partnership property only.

18-27

      (h) When the business of a partnership after dissolution is continued under any

18-28

conditions described in this section, the creditors of the dissolved partnership, as against the

18-29

separate creditors of the retiring or deceased partner or the representative of the deceased partner,

18-30

have a prior right to any claim of the retired partner or the representative of the deceased partner

18-31

against the person or partnership continuing the business, on account of the retired or deceased

18-32

partner's interest in the dissolved partnership or on account of any consideration promised for the

18-33

interest or for his or her right in partnership property.

18-34

      (i) Nothing in this section can be held to modify any right of creditors to set aside any

19-1

assignment on the ground of fraud.

19-2

      (j) The use by the person or partnership continuing the business of the partnership name,

19-3

or the name of a deceased partner as part of it, does not of itself make the individual property of

19-4

the deceased partner liable for any debts contracted by the person or partnership.

19-5

     7-12-53. Rights of retiring or estate of deceased partner when the business is

19-6

continued -- When any partner retires or dies, and the business is continued under any of the

19-7

conditions described in subsections (a), (b), (c), (e) or (f) of section 7-12-52, or section 7-12-

19-8

49(b)(2), without any settlement of accounts as between him or her or his or her estate and the

19-9

person or partnership continuing the business, unless otherwise agreed, he or she or his or her

19-10

legal representative as against the persons or partnership may have the value of his or her interest

19-11

at the date of dissolution ascertained, and shall receive as an ordinary creditor an amount equal to

19-12

the value of his or her interest in the dissolved partnership with interest, or, at his or her option or

19-13

at the option of his or her legal representative, in lieu of interest, the profits attributable to the use

19-14

of his or her right in the property of the dissolved partnership; provided, that the creditors of the

19-15

dissolved partnership as against the separate creditors, or the representative of the retired or

19-16

deceased partner, have priority on any claim arising under this section as provided by section 7-

19-17

12-52(h).

19-18

     7-12-54. Accrual of actions -- The right to an account of his or her interest accrues to

19-19

any partner, or his or her legal representative, as against the winding up partners or the surviving

19-20

partners or the person or partnership continuing the business, at the date of dissolution, in the

19-21

absence of any agreement to the contrary.

19-22

     7-12-55. Other laws preserved -- Nothing contained in sections 7-12-12 -- 7-12-55

19-23

affects the provisions of sections 7-12-1 -- 7-12-11 or of chapter 13 of this title.

19-24

     7-12-56. Registered limited liability partnerships -- (a) To become and to continue as a

19-25

registered limited liability partnership, a partnership shall file with the secretary of state an

19-26

application or a renewal application, stating the name of the partnership, the address of its

19-27

principal office, if the partnership's principal office is not located in this state, the address of a

19-28

registered office and the name and address of a registered agent for service of process in this state

19-29

which a partnership is required to maintain. In addition, partnerships under this section shall

19-30

provide the names and addresses of all resident partners, the place where the business records of

19-31

the partnership are maintained, or if more than one location for business records is maintained,

19-32

then the principal place of business of the partnership, number, a brief statement of the business

19-33

in which the partnership engaged, and that the partnership applies for status or renewal of its

19-34

status, as a registered limited liability partnership.

20-1

      (b) The application or renewal application is executed by a majority in interest of the

20-2

partners or by one or more partners authorized to execute an application or renewal application.

20-3

      (c) The application or renewal application is accompanied by a fee of one hundred

20-4

dollars ($100) for each partner, not to exceed two thousand five hundred dollars ($2,500) for each

20-5

partnership's initial filing or subsequent renewal application.

20-6

      (d) The secretary of state shall register as a registered limited liability partnership, and

20-7

shall renew the registration of any limited liability partnership, any partnership that submits a

20-8

completed application or renewal application with the required fee.

20-9

      (e) Registration is effective for one year after the date an application is filed, unless

20-10

voluntarily withdrawn by filing with the secretary of state a written withdrawal notice executed

20-11

by a majority in interest of the partners or by one or more partners authorized to execute a

20-12

withdrawal. Registration, whether pursuant to an original application or a renewal application, as

20-13

a registered limited liability partnership is renewed if, during the sixty (60) day period preceding

20-14

the date the application or renewal application otherwise would have expired, the partnership

20-15

filed with the secretary of state a renewal application. A renewal application expires one year

20-16

after the date an original application would have expired if the last renewal of the application had

20-17

not occurred.

20-18

      (f) The status of a partnership as a registered limited liability partnership is not affected

20-19

by changes after the filing of an application or a renewal application in the information stated in

20-20

the application or renewal application.

20-21

      (g) The secretary of state may provide forms for application for or renewal of

20-22

registration. Any renewals shall maintain resident partners as set out in this section.

20-23

      (h) A partnership that registers as a registered limited liability partnership is not deemed

20-24

to have dissolved as a result of that registration and is for all purposes the same partnership that

20-25

existed before the registration and continues to be a partnership under the laws of this state. If a

20-26

registered limited liability partnership dissolves, a partnership which is a successor to the

20-27

registered limited liability partnership and which intends to be a registered limited liability

20-28

partnership is not required to file a new application and is deemed to have filed any documents

20-29

required or permitted under this chapter which were filed by the predecessor partnership.

20-30

      (i) The fact that an application or renewal application is on file in the office of the

20-31

secretary of state is notice that the partnership is a registered limited liability partnership and is

20-32

notice of all other facts stated in the application or renewal application.

20-33

     7-12-57. Name of registered limited liability partnerships -- (a) The name of a

20-34

registered limited liability partnership contains the words "registered limited liability partnership"

21-1

or the abbreviation "L.L.P" or "LLP" as the last words or letters of its name.

21-2

      (b) The name cannot be the same, or deceptively similar to, the name of any domestic

21-3

for-profit or nonprofit corporation, or any domestic limited partnership or any domestic limited

21-4

liability company or any registered limited liability partnership existing under the laws of the

21-5

state or the name of any foreign for-profit or nonprofit corporation, or foreign limited partnership

21-6

or foreign limited liability company or foreign registered limited liability partnership authorized

21-7

to transact business in this state, or a name the exclusive right to which is, at the time filed,

21-8

reserved or registered in the manner provided under this title, subject to the following:

21-9

      (1) This provision does not apply if the applicant files with the secretary of state either of

21-10

the following:

21-11

      (i) The written consent of the other corporation, limited partnership, limited liability

21-12

company, registered limited liability partnership, or holder of a filed, reserved or registered name

21-13

to use the same or deceptively similar name and one or more words are added to make the name

21-14

distinguishable from the other name; or

21-15

      (ii) A certified copy of a final decree of a court of competent jurisdiction establishing the

21-16

prior right of the applicant to the use of the name in this state; and

21-17

      (2) The name may be the same as, or deceptively similar to, the name of a corporation or

21-18

limited liability company or registered limited liability partnership, the certificate of

21-19

incorporation, authority, organization or registration of which has been revoked by the secretary

21-20

of state as permitted by law and the revocation has not been withdrawn within one year from the

21-21

date of the revocation.

21-22

     7-12-58. Insurance or financial responsibility of registered limited liability

21-23

partnerships -- (a) A registered limited liability partnership that is to perform professional

21-24

services as defined in section 7-5.1-2 of the general laws shall carry, if reasonably available,

21-25

liability insurance of a kind that is designed to cover the kinds of negligence, wrongful acts or

21-26

misconduct for which liability is limited by section 7-12-26(b). The insurance shall be in the

21-27

aggregate amount of fifty thousand dollars ($50,000) multiplied by the number of professional

21-28

employees of the registered limited liability partnership as of the policy anniversary date;

21-29

provided, that in no case shall the coverage be less than one hundred thousand dollars ($100,000)

21-30

but in no event shall the necessary coverage exceed a maximum of five hundred thousand dollars

21-31

($500,000); provided, further, that any policy for insurance coverage may include a deductible

21-32

provision in any amount not to exceed twenty-five thousand dollars ($25,000) for each claim

21-33

multiplied by the number of professional employees of the limited liability partnership as of the

21-34

date of the issuance of the policy. The policy or policies of insurance may be subject to any terms,

22-1

conditions, exclusions and endorsements that are typically contained in policies of this type.

22-2

      (b) If, in any proceeding, compliance by a partnership with the requirements of

22-3

subsection (a is disputed:

22-4

      (1) That issue is determined by the court, and

22-5

      (2) The burden of proof of compliance is on the person who claims the limitation of

22-6

liability in section 7-12-26(b).

22-7

      (c) If a registered limited liability partnership is in compliance with the requirements of

22-8

subsection (a), the requirements of this section shall not be admissible or in any way be made

22-9

known to a jury in determining an issue of liability for or extent of the debt or obligation or

22-10

damages in question.

22-11

      (d) Insurance is reasonably available for the purpose of subsection (a) if, at the time that

22-12

the coverage would apply to the negligence, wrongful acts or misconduct in question it was

22-13

reasonably available to similar types of partnerships through the admitted or eligible surplus lines

22-14

market.

22-15

      (e) A registered limited liability partnership is considered to be in compliance with

22-16

subsection (a) if the partnership provides five hundred thousand dollars ($500,000) of funds

22-17

specifically designated and segregated for the satisfaction of judgments against the partnership

22-18

based on the forms of negligence, wrongful acts and misconduct for which liability is limited by

22-19

section 7-12-26(2) by:

22-20

      (1) Deposit in trust or in bank escrow of cash, bank certificates of deposit or United

22-21

States Treasury obligations; or

22-22

      (2) A bank letter of credit or insurance company bonds.

22-23

      (f) To the extent that a partnership maintains liability insurance or segregated funds

22-24

pursuant to the laws or regulations of another jurisdiction, the liability insurance or segregated

22-25

funds are deemed to satisfy this section if the amount hereof is equal to or greater than the amount

22-26

specified in subsection (a) or (e).

22-27

     7-12-59. Applicability to foreign and interstate commerce -- (a) A partnership,

22-28

including a registered limited liability partnership, formed and existing pursuant to an agreement

22-29

governed by this chapter may conduct its business, carry on its operations and have and exercise

22-30

the powers granted by this chapter in any state, territory, district or possession of the United

22-31

States or in any foreign country.

22-32

      (b) It is the intent of the general assembly that the legal existence of partnerships,

22-33

including registered limited liability partnerships, formed in this state are recognized outside the

22-34

boundaries of this state and that, subject to any reasonable requirement of registration, a

23-1

partnership, including a registered limited liability partnership, formed pursuant to an agreement

23-2

governed by this chapter and transacting business outside this state is granted the protection of

23-3

full faith and credit under the Constitution of the United States.

23-4

      (c) The liability of partners in a partnership, including registered limited liability

23-5

partnerships, formed and existing pursuant to an agreement governed by this chapter for the debts

23-6

and obligations of the partnership, is at all times determined exclusively by the laws of this state.

23-7

      (d) Before transacting business in this state, a foreign registered limited liability

23-8

partnership shall comply with any statutory or administrative registration or filing requirements

23-9

governing the specific type of business in which the partnership is engaged, and file a notice with

23-10

the secretary of state, on any forms that the Secretary provides, stating:

23-11

      (1) The name of the partnership;

23-12

      (2) The jurisdiction, the laws of which govern its partnership agreement and under which

23-13

it is registered as a limited liability partnership;

23-14

      (3) The address of its principal office;

23-15

      (4) If the partnership's principal office is not located in this state;

23-16

      (5) The address of a registered office and the name and address of a registered agent for

23-17

service of process in this state which the partnership shall be required to maintain;

23-18

      (6) The names and addresses of all resident partners in this state;

23-19

      (7) A brief statement of the business in which the partnership engages;

23-20

      (8) Any other information that the partnership determines to include,

23-21

      (9) A statement that the partnership is a registered limited liability partnership. The

23-22

notice shall be accompanied by a fee of one thousand dollars ($1,000). The notice is effective for

23-23

two (2) years from the date of filing, provided it is in compliance with section 7-12-56, after

23-24

which time the partnership shall file a new notice. The filing of the notice with the secretary of

23-25

state makes it unnecessary to file any other documents under sections 6-1-1 -- 6-1-4.

23-26

      (e) The name of a foreign registered limited liability partnership doing business in this

23-27

state shall contain the words "Registered Limited Liability Partnership" or "L.L.P." or "LLP", or

23-28

any other similar words or abbreviation as are required or authorized by the laws of the state

23-29

where the partnership is registered, as the last words or letters of its name.

23-30

      (f) The internal affairs of foreign registered limited liability partnerships, including the

23-31

liability of partners for debts, obligations and liabilities of or chargeable to the partnership or

23-32

another partner or partners, are subject to and governed by the laws of the jurisdiction in which

23-33

the foreign registered limited liability partnership is registered.

23-34

     SECTION 2. Title 7 of the General Laws entitled “Corporations, Associations, and

24-1

Partnerships” is hereby amended by adding thereto the following chapter:

24-2

     CHAPTER 12.1

24-3

     UNIFORM PARTNERSHIP ACT

24-4

     7-12.1-1. Title. – This chapter shall be known and cited as the “Uniform Partnership

24-5

Act.”

24-6

      7-12.1-2. Definitions. – In this act:

24-7

     (1) “Business” includes every trade, occupation, and profession.

24-8

     (2) “Debtor in bankruptcy” means a person who is the subject of:

24-9

     (i) an order for relief under Title 11 of the United States Code or a comparable order

24-10

under a successor statute of general application; or

24-11

     (ii) a comparable order under federal, state, or foreign law governing insolvency.

24-12

     (3) “Distribution” means a transfer of money or other property from a partnership to a

24-13

partner in the partner’s capacity as a partner or to the partner’s transferee.

24-14

     (4) “Foreign limited liability partnership” means a partnership that:

24-15

     (i) is formed under laws other than the laws of this state; and

24-16

     (ii) has the status of a limited liability partnership under those laws.

24-17

     (5) “Limited liability partnership” means a partnership that has filed a statement of

24-18

qualification under section 7-12.1-57 and does not have a similar statement in effect in any other

24-19

jurisdiction.

24-20

     (6) “Partnership” means an association of two (2) or more persons to carry on as co-

24-21

owners of a business for profit formed under section 7-12.1-10, predecessor law, or comparable

24-22

law of another jurisdiction.

24-23

     (7) “Partnership agreement” means the agreement, whether written, oral, or implied,

24-24

among the partners concerning the partnership, including amendments to the partnership

24-25

agreement.

24-26

     (8) “Partnership at will” means a partnership in which the partners have not agreed to

24-27

remain partners until the expiration of a definite term or the completion of a particular

24-28

undertaking.

24-29

     (9) “Partnership interest” or “partner’s interest in the partnership” means all of a

24-30

partner’s interests in the partnership, including the partner’s transferable interest and all

24-31

management and other rights.

24-32

     (10) “Person” means an individual, corporation, business trust, estate, trust, partnership,

24-33

association, joint venture, government, governmental subdivision, agency, or instrumentality, or

24-34

any other legal or commercial entity.

25-1

     (11) “Property” means all property, real, personal, or mixed, tangible or intangible, or

25-2

any interest therein.

25-3

     (12) “State” means a state of the United States, the District of Columbia, the

25-4

Commonwealth of Puerto Rico, or any territory or insular possession subject to the jurisdiction of

25-5

the United States.

25-6

     (13) “Statement” means a statement of partnership authority under section 7-12.1-15, a

25-7

statement of denial under section 7-12.1-15, a statement of dissociation under section 7-12.1-37, a

25-8

statement of dissolution under section 7-12.1-43, a statement of merger under section 7-12.1-52, a

25-9

statement of qualification under section 7-12.1-57, a statement of foreign qualification under

25-10

section 7-12.1-58, or an amendment or cancellation of any of the foregoing.

25-11

     (14) “Transfer” includes an assignment, conveyance, lease, mortgage, deed, and

25-12

encumbrance.

25-13

     7-12.1-3. Knowledge and notice. -- (a) A person knows a fact if the person has actual

25-14

knowledge of it.

25-15

     (b) A person has notice of a fact if the person:

25-16

     (1) knows of it;

25-17

     (2) has received a notification of it; or

25-18

     (3) has reason to know it exists from all of the facts known to the person at the time in

25-19

question.

25-20

     (c) A person notifies or gives a notification to another by taking steps reasonably

25-21

required to inform the other person in ordinary course, whether or not the other person learns of

25-22

it.

25-23

     (d) A person receives a notification when the notification:

25-24

     (1) comes to the person’s attention; or

25-25

     (2) is duly delivered at the person’s place of business or at any other place held out by the

25-26

person as a place for receiving communications.

25-27

     (e) Except as otherwise provided in subsection (f), a person other than an individual

25-28

knows, has notice, or receives a notification of a fact for purposes of a particular transaction when

25-29

the individual conducting the transaction knows, has notice, or receives a notification of the fact,

25-30

or in any event when the fact would have been brought to the individual’s attention if the person

25-31

had exercised reasonable diligence. The person exercises reasonable diligence if it maintains

25-32

reasonable routines for communicating significant information to the individual conducting the

25-33

transaction and there is reasonable compliance with the routines. Reasonable diligence does not

25-34

require an individual acting for the person to communicate information unless the communication

26-1

is part of the individual’s regular duties or the individual has reason to know of the transaction

26-2

and that the transaction would be materially affected by the information.

26-3

     (f) A partner’s knowledge, notice, or receipt of a notification of a fact relating to the

26-4

partnership is effective immediately as knowledge by, notice to, or receipt of a notification by the

26-5

partnership, except in the case of a fraud on the partnership committed by or with the consent of

26-6

that partner.

26-7

     7-12.1-4. Effect of partnership agreement – Nonwaivable provisions. -- (a) Except

26-8

as otherwise provided in subsection (b), relations among the partners and between the partners

26-9

and the partnership are governed by the partnership agreement. To the extent the partnership

26-10

agreement does not otherwise provide, this Act governs relations among the partners and

26-11

between the partners and the partnership.

26-12

     (b) The partnership agreement may not:

26-13

     (1) vary the rights and duties under section 7-12.1-6 except to eliminate the duty to

26-14

provide copies of statements to all of the partners;

26-15

     (2) unreasonably restrict the right of access to books and records under section 7-12.1-23;

26-16

     (3) eliminate the duty of loyalty under section 7-12.1-27 or 7-12.1-33; but:

26-17

     (i) the partnership agreement may identify specific types or categories of activities that do

26-18

not violate the duty of loyalty, if not manifestly unreasonable; or

26-19

     (ii) all of the partners or a number or percentage specified in the partnership agreement

26-20

may authorize or ratify, after full disclosure of all material facts, a specific act or transaction that

26-21

otherwise would violate the duty of loyalty;

26-22

     (4) unreasonably reduce the duty of care under section 7-12.1-24 or 7-12.1-33;

26-23

     (5) eliminate the obligation of good faith and fair dealing under section 7-12.1-24, but the

26-24

partnership agreement may prescribe the standards by which the performance of the obligation is

26-25

to be measured, if the standards are not manifestly unreasonable;

26-26

     (6) vary the power to dissociate as a partner under section 7-12.1-32, except to require the

26-27

notice under section 7-12.1-31 to be in writing;

26-28

     (7) vary the right of a court to expel a partner in the events specified in section 7-12.1-31;

26-29

     (8) vary the requirement to wind up the partnership business in cases specified in section

26-30

7-12.1-39;

26-31

     (9) vary the law applicable to a limited liability partnership under section 7-12.1-7; or

26-32

     (10) restrict rights of third parties under this chapter.

26-33

     7-12.1-5. Supplemental principles of law. -- (a) Unless displaced by particular

26-34

provisions of this chapter, the principles of law and equity supplement this chapter.

27-1

     (b) If an obligation to pay interest arises under this chapter and the rate is not specified,

27-2

the rate is that specified in any other applicable law.

27-3

      7-12.1-6. Execution, filing, and recording of statements. -- (a) A statement may be

27-4

filed in the office of the Secretary of State. A certified copy of a statement that is filed in an

27-5

office in another state may be filed in the office of the Secretary of State. Either filing has the

27-6

effect provided in this chapter with respect to partnership property located in or transactions that

27-7

occur in this state.

27-8

     (b) A certified copy of a statement that has been filed in the office of the Secretary of

27-9

State and recorded in the office for recording transfers of real property has the effect provided for

27-10

recorded statements in this chapter. A recorded statement that is not a certified copy of a

27-11

statement filed in the office of the Secretary of State does not have the effect provided for

27-12

recorded statements in this chapter.

27-13

     (c) A statement filed by a partnership must be executed by at least two (2) partners.

27-14

Other statements must be executed by a partner or other person authorized by this chapter, An

27-15

individual who executes a statement as, or on behalf of, a partner or other person named as a

27-16

partner in a statement shall personally declare under penalty of perjury that the contents of the

27-17

statement are accurate.

27-18

     (d) A person authorized by this chapter to file a statement may amend or cancel the

27-19

statement by filing an amendment or cancellation that names the partnership, identifies the

27-20

statement, and states the substance of the amendment or cancellation.

27-21

     (e) A person who files a statement pursuant to this section shall promptly send a copy of

27-22

the statement to every nonfiling partner and to any other person named as a partner in the

27-23

statement. Failure to send a copy of a statement to a partner or other person does not limit the

27-24

effectiveness of the statement as to a person not a partner.

27-25

     (f) The Secretary of State may collect a fee for filing or providing a certified copy of a

27-26

statement. The officer responsible for recording transfers of real property may collect a fee for

27-27

recording a statement.

27-28

     7-12.1-7. Governing law. -- (a) Except as otherwise provided in subsection (b), the law

27-29

of the jurisdiction in which a partnership has its chief executive office governs relations among

27-30

the partners and between the partners and the partnership.

27-31

     (b) The law of this state governs relations among the partners and between the partners

27-32

and the partnership and the liability of partners for an obligation of a limited liability partnership.

27-33

     7-12.1-8. Partnership subject to amendment or repeal of chapter. -- A partnership

27-34

governed by this chapter is subject to any amendment to or repeal of this chapter.

28-1

     7-12.1-9. Partnership as entity. -- (a) A partnership is an entity distinct from its

28-2

partners.

28-3

     (b) A limited liability partnership continues to be the same entity that existed before the

28-4

filing of a statement of qualification under section 7-12.1-54.

28-5

     7-12.1-10. Formation of partnership. -- (a) Except as otherwise provided in subsection

28-6

(b), the association of two or more persons to carry on as co-owners of a business for profit forms

28-7

a partnership, whether or not the persons intend to form a partnership.

28-8

     (b) An association formed under a statute other than this chapter, a predecessor statute, or

28-9

a comparable statute of another jurisdiction is not a partnership under this chapter.

28-10

     (c) In determining whether a partnership is formed, the following rules apply:

28-11

     (1) Joint tenancy, tenancy in common, tenancy by the entireties, joint property, common

28-12

property, or part ownership does not by itself establish a partnership, even if the co-owners share

28-13

profits made by the use of the property.

28-14

     (2) The sharing of gross returns does not by itself establish a partnership, even if the

28-15

persons sharing them have a joint or common right or interest in property from which the returns

28-16

are derived.

28-17

     (3) A person who receives a share of the profits of a business is presumed to be a partner

28-18

in the business, unless the profits were received in payment:

28-19

     (i) of a debt by installments or otherwise;

28-20

     (ii) for services as an independent contractor or of wages or other compensation to an

28-21

employee;

28-22

     (iii) of rent;

28-23

     (iv) of an annuity or other retirement or health benefit to a beneficiary, representative, or

28-24

designee of a deceased or retired partner;

28-25

     (v) of interest or other charge on a loan, even if the amount of payment varies with the

28-26

profits of the business, including a direct or indirect present or future ownership of the collateral,

28-27

or rights to income, proceeds, or increase in value derived from the collateral; or

28-28

     (vi) for the sale of the goodwill of a business or other property by installments or

28-29

otherwise.

28-30

     7-12.1-11. Partnership property. -- Property acquired by a partnership is property of the

28-31

partnership and not of the partners individually.

28-32

     7-12.1-12. When property is partnership property. -- (a) Property is partnership

28-33

property if acquired in the name of:

28-34

     (1) the partnership; or

29-1

     (2) one or more partners with an indication in the instrument transferring title to the

29-2

property of the person’s capacity as a partner or of the existence of a partnership but without an

29-3

indication of the name of the partnership.

29-4

     (b) Property is acquired in the name of the partnership by a transfer to:

29-5

     (1) the partnership in its name; or

29-6

     (2) one or more partners in their capacity as partners in the partnership, if the name of the

29-7

partnership is indicated in the instrument transferring title to the property.

29-8

     (c) Property is presumed to be partnership property if purchased with partnership assets,

29-9

even if not acquired in the name of the partnership or of one or more partners with an indication

29-10

in the instrument transferring title to the property of the person’s capacity as a partner or of the

29-11

existence of a partnership.

29-12

     (d) Property acquired in the name of one or more of the partners, without an indication in

29-13

the instrument transferring title to the property of the person’s capacity as a partner or of the

29-14

existence of a partnership and without use of partnership assets, is presumed to be separate

29-15

property, even if used for partnership purposes.

29-16

     7-12.1-13 Partner agency of partnership. -- Subject to the effect of a statement of

29-17

partnership authority under section 7-12.1-15.

29-18

     (1) Each partner is an agent of the partnership for the purpose of its business. An act of a

29-19

partner, including the execution of an instrument in the partnership name, for apparently carrying

29-20

on in the ordinary course the partnership business or business of the kind carried on by the

29-21

partnership binds the partnership, unless the partner had no authority to act for the partnership in

29-22

the particular matter and the person with whom the partner was dealing knew or had received a

29-23

notification that the partner lacked authority.

29-24

     (2) An act of a partner which is not apparently for carrying on in the ordinary course the

29-25

partnership business or business of the kind carried on by the partnership binds the partnership

29-26

only if the act was authorized by the other partners.

29-27

     7-12.1-14. Transfer of partnership property. -- (a) Partnership property may be

29-28

transferred as follows:

29-29

     (1) Subject to the effect of a statement of partnership authority under section 7-12.1-15,

29-30

partnership property held in the name of the partnership may be transferred by an instrument of

29-31

transfer executed by a partner in the partnership name.

29-32

     (2) Partnership property held in the name of one or more partners with an indication in

29-33

the instrument transferring the property to them of their capacity as partners or of the existence of

29-34

a partnership, but without an indication of the name of the partnership, may be transferred by an

30-1

instrument of transfer executed by the persons in whose name the property is held.

30-2

     (3) Partnership property held in the name of one or more persons other than the

30-3

partnership, without an indication in the instrument transferring the property to them of their

30-4

capacity as partners or of the existence of a partnership, may be transferred by an instrument of

30-5

transfer executed by the persons in whose name the property is held.

30-6

     (b) A partnership may recover partnership property from a transferee only if it proves

30-7

that execution of the instrument of initial transfer did not bind the partnership under section 7-

30-8

12.1-13 and:

30-9

     (1) as to a subsequent transferee who gave value for property transferred under

30-10

subsection (a)(1) and (2), proves that the subsequent transferee knew or had received a

30-11

notification that the person who executed the instrument of initial transfer lacked authority to bind

30-12

the partnership; or

30-13

     (2) as to a transferee who gave value for property transferred under subsection (a)(3),

30-14

proves that the transferee knew or had received a notification that the property was partnership

30-15

property and that the person who executed the instrument of initial transfer lacked authority to

30-16

bind the partnership.

30-17

     (c) A partnership may not recover partnership property from a subsequent transferee if

30-18

the partnership would not have been entitled to recover the property, under subsection (b), from

30-19

any earlier transferee of the property.

30-20

     (d) If a person holds all of the partners’ interests in the partnership, all of the partnership

30-21

property vests in that person. The person may execute a document in the name of the partnership

30-22

to evidence vesting of the property in that person and may file or record the document.

30-23

     7-12.1-15. Statement of partnership authority. -- (a) A partnership may file a

30-24

statement of partnership authority, which:

30-25

     (1) must include:

30-26

     (i) the name of the partnership;

30-27

     (ii) the street address of its chief executive office and of one office in this State, if there is

30-28

one;

30-29

     (iii) the names and mailing addresses of all of the partners or of an agent appointed and

30-30

maintained by the partnership for the purpose of subsection (b); and

30-31

     (iv) the names of the partners authorized to execute an instrument transferring real

30-32

property held in the name of the partnership; and

30-33

     (2) may state the authority, or limitations on the authority, of some or all of the partners to

30-34

enter into other transactions on behalf of the partnership and any other matter.

31-1

     (b) If a statement of partnership authority names an agent, the agent shall maintain a list

31-2

of the names and mailing addresses of all of the partners and make it available to any person on

31-3

request for good cause shown.

31-4

     (c) If a filed statement of partnership authority is executed pursuant to Section 7-12.1-

31-5

6(c) and states the name of the partnership but does not contain all of the other information

31-6

required by subsection (a), the statement nevertheless operates with respect to a person not a

31-7

partner as provided in subsections (d) and (e).

31-8

     (d) Except as otherwise provided in subsection (g), a filed statement of partnership

31-9

authority supplements the authority of a partner to enter into transactions on behalf of the

31-10

partnership as follows:

31-11

     (1) Except for transfers of real property, a grant of authority contained in a filed

31-12

statement of partnership authority is conclusive in favor of a person who gives value without

31-13

knowledge to the contrary, so long as and to the extent that a limitation on that authority is not

31-14

then contained in another filed statement. A filed cancellation of a limitation on authority revives

31-15

the previous grant of authority.

31-16

     (2) A grant of authority to transfer real property held in the name of the partnership

31-17

contained in a certified copy of a filed statement of partnership authority recorded in the office for

31-18

recording transfers of that real property is conclusive in favor of a person who gives value

31-19

without knowledge to the contrary, so long as and to the extent that a certified copy of a filed

31-20

statement containing a limitation on that authority is not then of record in the office for recording

31-21

transfers of that real property. The recording in the office for recording transfers of that real

31-22

property of a certified copy of a filed cancellation of a limitation on authority revives the previous

31-23

grant of authority.

31-24

     (e) A person not a partner is deemed to know of a limitation on the authority of a partner

31-25

to transfer real property held in the name of the partnership if a certified copy of the filed

31-26

statement containing the limitation on authority is of record in the office for recording transfers of

31-27

that real property.

31-28

     (f) Except as otherwise provided in subsections (d) and (e) and sections 7-12.1-37 and 7-

31-29

12.1-73, a person not a partner is not deemed to know of a limitation on the authority of a partner

31-30

merely because the limitation is contained in a filed statement.

31-31

     (g) Unless earlier cancelled, a filed statement of partnership authority is cancelled by

31-32

operation of law five (5) years after the date on which the statement, or the most recent

31-33

amendment, was filed with the Secretary of State.

31-34

     7-12.1-15. Statement of denial. -- A partner or other person named as a partner in a filed

32-1

statement of partnership authority or in a list maintained by an agent pursuant to subsection 7-

32-2

12.1-15(b) may file a statement of denial stating the name of the partnership and the fact that is

32-3

being denied, which may include denial of a person’s authority or status as a partner. A statement

32-4

of denial is a limitation on authority as provided in subsection 7-12.1-15(d) and (e).

32-5

     7-12.1-18. Partnership liable for partner’s actionable conduct. -- (a) A partnership is

32-6

liable for loss or injury caused to a person, or for a penalty incurred, as a result of a wrongful act

32-7

or omission, or other actionable conduct, of a partner acting in the ordinary course of business of

32-8

the partnership or with authority of the partnership.

32-9

     (b) If, in the course of the partnership’s business or while acting with authority of the

32-10

partnership, a partner receives or causes the partnership to receive money or property of a person

32-11

not a partner, and the money or property is misapplied by a partner, the partnership is liable for

32-12

the loss.

32-13

     7-12.1-19. Partner’s liability. -- (a) Except as otherwise provided in subsections (b) and

32-14

(c), all partners are liable jointly and severally for all obligations of the partnership unless

32-15

otherwise agreed by the claimant or provided by law.

32-16

     (b) A person admitted as a partner into an existing partnership is not personally liable for

32-17

any partnership obligation incurred before the person’s admission as a partner.

32-18

     (c) An obligation of a partnership incurred while the partnership is a limited liability

32-19

partnership, whether arising in contract, tort, or otherwise, is solely the obligation of the

32-20

partnership. A partner is not personally liable, directly or indirectly, by way of contribution or

32-21

otherwise, for such an obligation solely by reason of being or so acting as a partner. This

32-22

subsection applies notwithstanding anything inconsistent in the partnership agreement that existed

32-23

immediately before the vote required to become a limited liability partnership under section 7-

32-24

12.1-54(b).

32-25

     7-12.1-20. Actions by and against partnership and partners. -- (a) A partnership may

32-26

sue and be sued in the name of the partnership.

32-27

     (b) An action may be brought against the partnership and, to the extent not inconsistent

32-28

with section 7-12.1-18, any or all of the partners in the same action or in separate actions.

32-29

     (c) A judgment against a partnership is not by itself a judgment against a partner. A

32-30

judgment against a partnership may not be satisfied from a partner’s assets unless there is also a

32-31

judgment against the partner.

32-32

     (d) A judgment creditor of a partner may not levy execution against the assets of the

32-33

partner to satisfy a judgment based on a claim against the partnership unless the partner is

32-34

personally liable for the claim under section 7-12.1-18 and:

33-1

     (1) a judgment based on the same claim has been obtained against the partnership and a

33-2

writ of execution on the judgment has been returned unsatisfied in whole or in part;

33-3

     (2) the partnership is a debtor in bankruptcy;

33-4

     (3) the partner has agreed that the creditor need not exhaust partnership assets;

33-5

     (4) a court grants permission to the judgment creditor to levy execution against the assets

33-6

of a partner based on a finding that partnership assets subject to execution are clearly insufficient

33-7

to satisfy the judgment, that exhaustion of partnership assets is excessively burdensome, or that

33-8

the grant of permission is an appropriate exercise of the court’s equitable powers; or

33-9

     (5) liability is imposed on the partner by law or contract independent of the existence of

33-10

the partnership.

33-11

     (e) This section applies to any partnership liability or obligation resulting from a

33-12

representation by a partner or purported partner under section 7-12.1-20.

33-13

     7-12.1-21. Liability of purported partner. -- (a) If a person, by words or conduct,

33-14

purports to be a partner, or consents to being represented by another as a partner, in a partnership

33-15

or with one or more persons not partners, the purported partner is liable to a person to whom the

33-16

representation is made, if that person, relying on the representation, enters into a transaction with

33-17

the actual or purported partnership. If the representation, either by the purported partner or by a

33-18

person with the purported partner’s consent, is made in a public manner, the purported partner is

33-19

liable to a person who relies upon the purported partnership even if the purported partner is not

33-20

aware of being held out as a partner to the claimant. If partnership liability results, the purported

33-21

partner is liable with respect to that liability as if the purported partner were a partner. If no

33-22

partnership liability results, the purported partner is liable with respect to that liability jointly and

33-23

severally with any other person consenting to the representation.

33-24

     (b) If a person is thus represented to be a partner in an existing partnership, or with one

33-25

or more persons not partners, the purported partner is an agent of persons consenting to the

33-26

representation to bind them to the same extent and in the same manner as if the purported partner

33-27

were a partner, with respect to persons who enter into transactions in reliance upon the

33-28

representation. If all of the partners of the existing partnership consent to the representation, a

33-29

partnership act or obligation results. If fewer than all of the partners of the existing partnership

33-30

consent to the representation, the person acting and the partners consenting to the representation

33-31

are jointly and severally liable.

33-32

     (c) A person is not liable as a partner merely because the person is named by another in a

33-33

statement of partnership authority.

33-34

     (d) A person does not continue to be liable as a partner merely because of a failure to file

34-1

a statement of dissociation or to amend a statement of partnership authority to indicate the

34-2

partner’s dissociation from the partnership.

34-3

     (e) Except as otherwise provided in subsections (a) and (b), persons who are not partners

34-4

as to each other are not liable as partners to other persons.

34-5

     7-12.1-22. Partner’s rights and duties. -- (a) Each partner is deemed to have an account

34-6

that is:

34-7

     (1) credited with an amount equal to the money plus the value of any other property, net

34-8

of the amount of any liabilities, the partner contributes to the partnership and the partner’s share

34-9

of the partnership profits; and

34-10

     (2) charged with an amount equal to the money plus the value of any other property, net

34-11

of the amount of any liabilities, distributed by the partnership to the partner and the partner’s

34-12

share of the partnership losses.

34-13

     (b) Each partner is entitled to an equal share of the partnership profits and is chargeable

34-14

with a share of the partnership losses in proportion to the partner’s share of the profits.

34-15

     (c) A partnership shall reimburse a partner for payments made and indemnify a partner

34-16

for liabilities incurred by the partner in the ordinary course of the business of the partnership or

34-17

for the preservation of its business or property.

34-18

     (d) A partnership shall reimburse a partner for an advance to the partnership beyond the

34-19

amount of capital the partner agreed to contribute.

34-20

     (e) A payment or advance made by a partner which gives rise to a partnership obligation

34-21

under subsection (c) or (d) constitutes a loan to the partnership which accrues interest from the

34-22

date of the payment or advance.

34-23

     (f) Each partner has equal rights in the management and conduct of the partnership

34-24

business.

34-25

     (g) A partner may use or possess partnership property only on behalf of the partnership.

34-26

     (h) A partner is not entitled to remuneration for services performed for the partnership,

34-27

except for reasonable compensation for services rendered in winding up the business of the

34-28

partnership.

34-29

     (i) A person may become a partner only with the consent of all of the partners.

34-30

     (j) A difference arising as to a matter in the ordinary course of business of a partnership

34-31

may be decided by a majority of the partners. An act outside the ordinary course of business of a

34-32

partnership and an amendment to the partnership agreement may be undertaken only with the

34-33

consent of all of the partners.

34-34

     (k) This section does not affect the obligations of a partnership to other persons under

35-1

Section 7-12.1-13.

35-2

     7-12.1-23. Distributions in kind. -- A partner has no right to receive, and may not be

35-3

required to accept, a distribution in kind.

35-4

     7-12.1-24. Partner’s rights and duties with respect to information. -- (a) A

35-5

partnership shall keep its books and records, if any, at its chief executive office.

35-6

     (b) A partnership shall provide partners and their agents and attorneys access to its books

35-7

and records. It shall provide former partners and their agents and attorneys access to books and

35-8

records pertaining to the period during which they were partners. The right of access provides the

35-9

opportunity to inspect and copy books and records during ordinary business hours. A partnership

35-10

may impose a reasonable charge, covering the costs of labor and material, for copies of

35-11

documents furnished.

35-12

     (c) Each partner and the partnership shall furnish to a partner, and to the legal

35-13

representative of a deceased partner or partner under legal disability:

35-14

     (1) without demand, any information concerning the partnership’s business and affairs

35-15

reasonably required for the proper exercise of the partner’s rights and duties under the partnership

35-16

agreement or this chapter; and

35-17

     (2) on demand, any other information concerning the partnership’s business and affairs,

35-18

except to the extent the demand or the information demanded is unreasonable or otherwise

35-19

improper under the circumstances.

35-20

     7-12.1-25. General standards of partner’s conduct. -- (a) The only fiduciary duties a

35-21

partner owes to the partnership and the other partners are the duty of loyalty and the duty of care

35-22

set forth in subsections (b) and (c).

35-23

     (b) A partner’s duty of loyalty to the partnership and the other partners is limited to the

35-24

following:

35-25

     (1) to account to the partnership and hold as trustee for it any property, profit, or benefit

35-26

derived by the partner in the conduct and winding up of the partnership business or derived from

35-27

a use by the partner of partnership property, including the appropriation of a partnership

35-28

opportunity;

35-29

     (2) to refrain from dealing with the partnership in the conduct or winding up of the

35-30

partnership business as or on behalf of a party having an interest adverse to the partnership; and

35-31

     (3) to refrain from competing with the partnership in the conduct of the partnership

35-32

business before the dissolution of the partnership.

35-33

     (c) A partner’s duty of care to the partnership and the other partners in the conduct and

35-34

winding up of the partnership business is limited to refraining from engaging in grossly negligent

36-1

or reckless conduct, intentional misconduct, or a knowing violation of law.

36-2

     (d) A partner shall discharge the duties to the partnership and the other partners under

36-3

this chapter or under the partnership agreement and exercise any rights consistently with the

36-4

obligation of good faith and fair dealing.

36-5

     (e) A partner does not violate a duty or obligation under this chapter or under the

36-6

partnership agreement merely because the partner’s conduct furthers the partner’s own interest.

36-7

     (f) A partner may lend money to and transact other business with the partnership, and as

36-8

to each loan or transaction the rights and obligations of the partner are the same as those of a

36-9

person who is not a partner, subject to other applicable law.

36-10

     (g) This section applies to a person winding up the partnership business as the personal

36-11

or legal representative of the last surviving partner as if the person were a partner.

36-12

     7-12.1-26. Actions by partnership and partners. -- (a) A partnership may maintain an

36-13

action against a partner for a breach of the partnership agreement, or for the violation of a duty to

36-14

the partnership, causing harm to the partnership.

36-15

     (b) A partner may maintain an action against the partnership or another partner for legal

36-16

or equitable relief, with or without an accounting as to partnership business, to:

36-17

     (1) enforce the partner’s rights under the partnership agreement;

36-18

     (2) enforce the partner’s rights under this Act, including:

36-19

     (i) the partner’s rights under sections 7-12.1-22, 7-12.1-24, or 7-12.1-25;

36-20

     (ii) the partner’s right on dissociation to have the partner’s interest in the partnership

36-21

purchased pursuant to section 7-12.1-35 or enforce any other right under sections 7-12.1-32, 7-

36-22

12.1-33, 7-12.1-34, 7-12.1-35, 7-12.1-36, 7-12.1-37, 7-12.1-38, 7-12.1-39; or

36-23

     (iii) the partner’s right to compel a dissolution and winding up of the partnership business

36-24

under sections 7-12.1-40, 7-12.1-41, 7-12.1-42, 7-12.1-43, 7-12.1-44, 7-12.1-45, 7-12.1-46.

36-25

     (3) enforce the rights and otherwise protect the interests of the partner, including rights

36-26

and interests arising independently of the partnership relationship.

36-27

     (c) The accrual of, and any time limitation on, a right of action for a remedy under this

36-28

section is governed by other law. A right to an accounting upon a dissolution and winding up

36-29

does not revive a claim barred by law.

36-30

     7-12.1-27. Continuation of partnership beyond definite term or particular

36-31

undertaking. -- (a) If a partnership for a definite term or particular undertaking is continued,

36-32

without an express agreement, after the expiration of the term or completion of the undertaking,

36-33

the rights and duties of the partners remain the same as they were at the expiration or completion,

36-34

so far as is consistent with a partnership at will.

37-1

     (b) If the partners, or those of them who habitually acted in the business during the term

37-2

or undertaking, continue the business without any settlement or liquidation of the partnership,

37-3

they are presumed to have agreed that the partnership will continue.

37-4

     7-12.1-28. Partner not co-owner of partnership property. -- A partner is not a co-

37-5

owner of partnership property and has no interest in partnership property which can be

37-6

transferred, either voluntarily or involuntarily.

37-7

     7-12.1-29. Partner’s transferable interest in partnership. -- The only transferable

37-8

interest of a partner in the partnership is the partner’s share of the profits and losses of the

37-9

partnership and the partner’s right to receive distributions. The interest is personal property.

37-10

     7-12.1-30. Transfer of partner’s transferable interest. -- (a) A transfer, in whole or in

37-11

part, of a partner’s transferable interest in the partnership:

37-12

     (1) is permissible;

37-13

     (2) does not by itself cause the partner’s dissociation or a dissolution and winding up of

37-14

the partnership business; and

37-15

     (3) does not, as against the other partners or the partnership, entitle the transferee, during

37-16

the continuance of the partnership, to participate in the management or conduct of the partnership

37-17

business, to require access to information concerning partnership transactions, or to inspect or

37-18

copy the partnership books or records.

37-19

     (b) A transferee of a partner’s transferable interest in the partnership has a right:

37-20

     (1) to receive, in accordance with the transfer, distributions to which the transferor would

37-21

otherwise be entitled;

37-22

     (2) to receive upon the dissolution and winding up of the partnership business, in

37-23

accordance with the transfer, the net amount otherwise distributable to the transferor; and

37-24

     (3) to seek under section 7-12.1-40 a judicial determination that it is equitable to wind up

37-25

the partnership business.

37-26

     (c) In a dissolution and winding up, a transferee is entitled to an account of partnership

37-27

transactions only from the date of the latest account agreed to by all of the partners.

37-28

     (d) Upon transfer, the transferor retains the rights and duties of a partner other than the

37-29

interest in distributions transferred.

37-30

     (e) A partnership need not give effect to a transferee’s rights under this section until it has

37-31

notice of the transfer.

37-32

     (f) A transfer of a partner’s transferable interest in the partnership in violation of a

37-33

restriction on transfer contained in the partnership agreement is ineffective as to a person having

37-34

notice of the restriction at the time of transfer.

38-1

     7-12.1-31. Partner’s transferable interest subject to charging order. -- (a) On

38-2

application by a judgment creditor of a partner or of a partner’s transferee, a court having

38-3

jurisdiction may charge the transferable interest of the judgment debtor to satisfy the judgment.

38-4

The court may appoint a receiver of the share of the distributions due or to become due to the

38-5

judgment debtor in respect of the partnership and make all other orders, directions, accounts, and

38-6

inquiries the judgment debtor might have made or which the circumstances of the case may

38-7

require.

38-8

     (b) A charging order constitutes a lien on the judgment debtor’s transferable interest in

38-9

the partnership. The court may order a foreclosure of the interest subject to the charging order at

38-10

any time. The purchaser at the foreclosure sale has the rights of a transferee.

38-11

     (c) At any time before foreclosure, an interest charged may be redeemed:

38-12

     (1) by the judgment debtor;

38-13

     (2) with property other than partnership property, by one or more of the other partners; or

38-14

     (3) with partnership property, by one or more of the other partners with the consent of all

38-15

of the partners whose interests are not so charged.

38-16

     (d) This chapter does not deprive a partner of a right under exemption laws with respect

38-17

to the partner’s interest in the partnership.

38-18

     (e) This section provides the exclusive remedy by which a judgment creditor of a partner

38-19

or partner’s transferee may satisfy a judgment out of the judgment debtor’s transferable interest in

38-20

the partnership.

38-21

     7-12.1-32. Events causing partner’s dissociation. -- A partner is dissociated from a

38-22

partnership upon the occurrence of any of the following events:

38-23

     (1) the partnership’s having notice of the partner’s express will to withdraw as a partner