UPA S.21 Partner Accountable as a Fiduciary – partner must account to P-S for any benefit Applies to all representatives of a deceased partner as well. Meinhard v. Salmon (NY 1928) Lease btwn G & S, S enters separate agreement with M S to operate, M to – pay ½ costs. Near end of lease, reversion enters into extended lease; S did not tell M. Issue Does S have a duty to include M in the new lease? – Holding YES, related to their nexus of opportunity – Those acting as partnership have undivided loyalty to one another New lease was incident of the enterprise, which S appropriated in secret, excluding M from chance to compete from opportunity arising from participation in partnership Should receive half of lease, with ~1share adjustment to account for S’ mngmnt interest JV/General Partnership distinction doesn’t seem to matter If G had approached capital partner instead, maybe a diff outcome S has – greater duty b/c of mngmnt role. Dissociation and Dissolution 3 stages: formal dissolution; winding down; termination Fiduc duties still exist - might even be heightened to avoid looting. Also continue to be personally liable during this period (unless altered by agrmnt) Except if P-S continues after dissolution, leaving partner not liab for future acts. Terminates actual authority (except that needed to wind down) problem is – apparent authority (key is to send notice to 3d parties) UPA S.29 Dissolution – Def change in relation of the partners caused by any partner ceasing to be – assoc in carrying on of the business (refers to personal rel. of the partners) Terminology At will agreement has no specified definite term or undertaking (default) – Term Partnership implicit/explicit agreement by all partners that P-S shall – have definite term for a particular undertaking. Statement that goal of partnership is to recoup investment not suffic to constitute a “term” Rightful Dissolution w/o violation of the agreement – Wronful in contravention of terms of agreement – Dissolving partner must pay damages, for breach of contract. Formal Dissolution Step 1 – Req’s a formal P-S to end on set date Partner walks away Death/Bankruptcy Court Order Key reasons: – Breach of agreement/partner conducts self unreasonably P-S can only carry on at a loss partner capable of performing function
UPA S.21 – Partner Accountable as a Fiduciary partner must account to P-S for any benefit Applies to all representatives of a deceased partner as well. Meinhard v. Salmon (NY 1928) Lease btwn G & S, S enters separate agreement with M – S to operate, M to pay ½ costs. Near end of lease, reversion enters into extended lease; S did not tell M. Issue – Does S have a duty to include M in the new lease? Holding – YES, related to their nexus of opportunity Those acting as partnership have undivided loyalty to one another New lease was incident of the enterprise, which S appropriated in secret, excluding M from chance to compete from opportunity arising from participation in partnership Should receive half of lease, with ~1share adjustment to account for S’ mngmnt interest JV/General Partnership distinction doesn’t seem to matter If G had approached capital partner instead, maybe a diff outcome – S has greater duty b/c of mngmnt role. Dissociation and Dissolution 3 stages: formal dissolution; winding down; termination Fiduc duties still exist - might even be heightened to avoid looting. Also continue to be personally liable during this period (unless altered by agrmnt) Except if P-S continues after dissolution, leaving partner not liab for future acts. Terminates actual authority (except that needed to wind down) – problem is apparent authority (key is to send notice to 3d parties) UPA S.29 – Dissolution Def – change in relation of the partners caused by any partner ceasing to be assoc in carrying on of the business (refers to personal rel. of the partners) Terminology At will – agreement has no specified definite term or undertaking (default) Term Partnership – implicit/explicit agreement by all partners that P-S shall have definite term for a particular undertaking. Statement that goal of partnership is to recoup investment not suffic to constitute a “term” Rightful Dissolution – w/o violation of the agreement Wronful – in contravention of terms of agreement Dissolving partner must pay damages, for breach of contract. Formal Dissolution – Step 1 Req’s a formal P-S to end on set date Partner walks away Death/Bankruptcy Court Order – Key reasons: Breach of agreement/partner conducts self unreasonably P-S can only carry on at a loss partner capable of performing function