Actions Which Can Bind a Dissolved Partnership; Liability of Partners

  1. Law
  2. Georgia Code
  3. Corporations, Partnerships, and Associations
  4. Partnerships
  5. Actions Which Can Bind a Dissolved Partnership; Liability of Partners

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  1. After dissolution a partner can bind the partnership except as provided in subsection (c) of this Code section:
    1. By any act appropriate for winding up partnership affairs or completing transactions unfinished at dissolution;
    2. By any transaction which would bind the partnership if dissolution had not taken place, provided the other party to the transaction:
      1. Was a creditor of the partnership at the time of dissolution or had extended credit to the partnership within two years prior to dissolution and, in either case, had no knowledge or notice of such partner's want of authority;
      2. Though he had not so extended credit, had nevertheless known of the partnership prior to dissolution, and, having no knowledge or notice of dissolution, the fact of dissolution had not been advertised in a newspaper of general circulation in the place (or in each place if more than one) at which the partnership business was regularly carried on.
  2. The liability of a partner under paragraph (2) of subsection (a) of this Code section shall be satisfied out of partnership assets alone when such partner had been prior to dissolution:
    1. Unknown as a partner to the person with whom the contract is made; and
    2. So far unknown and inactive in partnership affairs that the business reputation of the partnership could not be said to have been in any degree due to his connection with it.
  3. The partnership is in no case bound by any act of a partner after dissolution:
    1. Where the partnership is dissolved because it is unlawful to carry on the business, unless the act is appropriate for winding up partnership affairs;
    2. Where the partner has become bankrupt; or
    3. Where the partner has no authority to wind up partnership affairs; except by a transaction with one who:
      1. Was a creditor of the partnership at the time of dissolution or had extended credit to the partnership within two years prior to dissolution and, in either case, had no knowledge or notice of such partner's want of authority;
      2. Had not extended credit to the partnership prior to dissolution, and, having no knowledge or notice of such partner's want of authority, the fact of such partner's want of authority had not been advertised in the manner provided for advertising the fact of dissolution in subparagraph (a)(2)(B) of this Code section.
  4. Nothing in this Code section shall affect the liability under Code Section 14-8-16 of any person who after dissolution represents himself or consents to another representing him as a partner in a partnership engaged in carrying on business.

(Code 1981, §14-8-35, enacted by Ga. L. 1984, p. 1439, § 1.)

RESEARCH REFERENCES

Am. Jur. 2d.

- 59A Am. Jur. 2d, Partnership, § 564 et seq.

C.J.S.

- 68 C.J.S., Partnership, § 431 et seq.

ALR.

- Right of solvent partner to close firm business upon bankruptcy or insolvency of copartner, 29 A.L.R. 45.

Creditor's failure to dissent to retiring partner's notice of noncontinuing liability as assent to his release, 52 A.L.R. 499.

Liability of former partners as such in respect of transactions subsequent to incorporation of their business, 89 A.L.R. 986.

Powers of liquidating partner with respect to incurring of obligations, 60 A.L.R.2d 826.


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