Title 54. Partnership
§54-1. Repealed by Laws 1955, p. 298, § 44, emerg. eff. June 3, 1955.
§54-1-100. Short title.
Sections 1 through 64 of this act shall be known and may be cited as the "Oklahoma Revised Uniform Partnership Act".
Added by Laws 1997, c. 399, § 1, eff. Nov. 1, 1997.
§54-1-101. Definitions.
Definitions.
As used in this act:
(1) "Business" includes every trade, occupation, and profession.
(2) "Debtor in bankruptcy" means a person who is the subject of:
(i) an order for relief under Title 11 of the United States Code or a comparable order under a successor statute of general application; or
(ii) a comparable order under federal, state, or foreign law governing insolvency.
(3) "Distribution" means a transfer of money or other property from a partnership to a partner in the partner's capacity as a partner or to the partner's transferee.
(4) "Foreign limited liability partnership" means a partnership that:
(i) is formed under laws other than the laws of this state; and
(ii) has the status of a limited liability partnership under those laws.
(5) "Limited liability partnership" means a partnership that has filed a statement of qualification under Section 55 of this act and does not have a similar statement in effect in any other jurisdiction.
(6) "Partnership" means an association of two or more persons to carry on as co-owners a business for profit formed under Section 10 of this act, predecessor law, or comparable law of another jurisdiction.
(7) "Partnership agreement" means the agreement, whether written, oral, or implied, among the partners concerning the partnership, including amendments to the partnership agreement; and a partnership agreement binds a partner of a partnership or a transferee of an economic interest regardless of whether the partner or transferee executes the partnership agreement.
(8) "Partnership at will" means a partnership in which the partners have not agreed to remain partners until the expiration of a definite term or the completion of a particular undertaking.
(9) "Partnership interest" or "partner's interest in the partnership" means all of a partner's interests in the partnership, including the partner's transferable interest and all management and other rights.
(10) "Person" means an individual, corporation, business trust, estate, trust, partnership, association, joint venture, limited liability company, government, governmental subdivision, agency, or instrumentality, or any other legal or commercial entity.
(11) "Property" means all property, real, personal, or mixed, tangible or intangible, or any interest therein.
(12) "State" means a state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, or any territory or insular possession subject to the jurisdiction of the United States.
(13) "Statement" means a statement of partnership authority under Section 15 of this act, a statement of denial under Section 16 of this act, a statement of dissociation under Section 38 of this act, a statement of dissolution under Section 44 of this act, a statement of merger under Section 53 of this act, a statement of qualification under Section 55 of this act, a statement of foreign qualification under Section 58 of this act, or an amendment or cancellation of any of the foregoing.
(14) "Transfer" includes an assignment, conveyance, lease, mortgage, deed, and encumbrance.
Added by Laws 1997, c. 399, § 2, eff. Nov. 1, 1997. Amended by Laws 2008, c. 253, § 32.
NOTE: Laws 2008, c. 382, § 315, which changed the effective date of Laws 2008, c. 253, §§ 1-47 to Jan. 1, 2010, was held unconstitutional by the Oklahoma Supreme Court in the case of Weddington v. Henry, 202 P.3d 143, 2008 OK 102 (2009).
§54-1-102. Knowledge and Notice.
Knowledge and Notice. (a) A person knows a fact if the person has actual knowledge of it.
(b) A person has notice of a fact if the person:
(1) knows of it;
(2) has received a notification of it; or
(3) has reason to know it exists from all of the facts known to the person at the time in question.
(c) A person notifies or gives a notification to another by taking steps reasonably required to inform the other person in ordinary course, whether or not the other person learns of it.
(d) A person receives a notification when the notification:
(1) comes to the person's attention; or
(2) is duly delivered at the person's place of business or at any other place held out by the person as a place for receiving communications.
(e) Except as otherwise provided in subsection (f) of this section, a person other than an individual knows, has notice, or receives a notification of a fact for purposes of a particular transaction when the individual conducting the transaction knows, has notice, or receives a notification of the fact, or in any event when the fact would have been brought to the individual's attention if the person had exercised reasonable diligence. The person exercises reasonable diligence if it maintains reasonable routines for communicating significant information to the individual conducting the transaction and there is reasonable compliance with the routines. Reasonable diligence does not require an individual acting for the person to communicate information unless the communication is part of the individual's regular duties or the individual has reason to know of the transaction and that the transaction would be materially affected by the information.
(f) A partner's knowledge, notice, or receipt of a notification of a fact relating to the partnership is effective immediately as knowledge of, notice to, or receipt of a notification by the partnership, except in the case of a fraud on the partnership committed by or with the consent of that partner.
Added by Laws 1997, c. 399, § 3, eff. Nov. 1, 1997.
§54-1-103. Effect of Partnership Agreement; Nonwaivable Provisions.
Effect of Partnership Agreement; Nonwaivable Provisions. (a) Except as otherwise provided in subsection (b) of this section, relations among the partners and between the partners and the partnership are governed by the partnership agreement. To the extent the partnership agreement does not otherwise provide, this act governs relations among the partners and between the partners and the partnership.
(b) The partnership agreement may not:
(1) vary the rights and duties under Section 6 of this act except to eliminate the duty to provide copies of statements to all of the partners;
(2) unreasonably restrict the right of access to books and records under subsection (b) of Section 24 of this act;
(3) eliminate the duty of loyalty under subsection (b) of Section 25 of this act or paragraph (3) of subsection (b) of Section 34 of this act, but:
(i) the partnership agreement may identify specific types or categories of activities that do not violate the duty of loyalty, if not manifestly unreasonable; or
(ii) all of the partners or a number or percentage specified in the partnership agreement may authorize or ratify, after full disclosure of all material facts, a specific act or transaction that otherwise would violate the duty of loyalty;
(4) unreasonably reduce the duty of care under subsection (c) of Section 25 of this act or paragraph (3) of subsection (b) of Section 34 of this act;
(5) eliminate the obligation of good faith and fair dealing under subsection (d) of Section 25 of this act, but the partnership agreement may prescribe the standards by which the performance of the obligation is to be measured, if the standards are not manifestly unreasonable;
(6) vary the power to dissociate as a partner under subsection (a) of Section 33 of this act, except to require the notice under paragraph (1) of Section 32 of this act to be in writing;
(7) vary the right of a court to expel a partner in the events specified in paragraph (5) of Section 32 of this act;
(8) vary the requirement to wind up the partnership business in cases specified in paragraphs (4), (5), or (6) of Section 40 of this act; or
(9) vary the law applicable to a limited liability partnership under subsection (b) of Section 7 of this act; or
(10) restrict rights of third parties under this act.
Added by Laws 1997, c. 399, § 4, eff. Nov. 1, 1997.
§54-1-104. Supplemental Principles of Law.
Supplemental Principles of Law. (a) Unless displaced by particular provisions of this act, the principles of law and equity supplement this act.
(b) If an obligation to pay interest arises under this act and the rate is not specified, the rate is that specified in Section 727 of Title 12 of the Oklahoma Statutes.
Added by Laws 1997, c. 399, § 5, eff. Nov. 1, 1997.
§54-1-105. Execution, filing, and recording of statements.
Execution, Filing, and Recording of Statements.
(a) A statement may be filed in the office of the Secretary of State. A certified copy of a statement that is filed in an office in another state may be filed in the office of the Secretary of State. Either filing has the effect provided in this act with respect to partnership property located in or transactions that occur in this state.
(b) A certified copy of a statement that has been filed in the office of the Secretary of State and recorded in the office for recording transfers of real property has the effect provided for recorded statements in this act. A recorded statement that is not a certified copy of a statement filed in the office of the Secretary of State does not have the effect provided for recorded statements in this act.
(c) A statement filed by a partnership must be executed by at least two partners. Other statements must be executed by a partner or other person authorized by this act. An individual who executes a statement as, or on behalf of, a partner or other person named as a partner in a statement shall personally declare under penalty of perjury that the contents of the statement are accurate.
(d) A person authorized by this act to file a statement may amend or cancel the statement by filing an amendment or cancellation that names the partnership, identifies the statement, and states the substance of the amendment or cancellation.
(e) A person who files a statement pursuant to this section shall promptly send a copy of the statement to every nonfiling partner and to any other person named as a partner in the statement. Failure to send a copy of a statement to a partner or other person does not limit the effectiveness of the statement as to a person not a partner.
(f) The county clerk recording transfers of real property may collect a fee for recording a statement.
(g) The Secretary of State shall charge and collect the following fees:
(1) for filing a statement, a fee of One Hundred Dollars ($100.00);
(2) for filing an amendment, cancellation, or dissolution, a fee of Fifty Dollars ($50.00);
(3) for filing a statement of denial, a fee of Twenty-five Dollars ($25.00);
(4) for filing a statement of disassociation, a fee of Twenty-five Dollars ($25.00);
(5) for filing a statement of change of agent or office, resignation of agent, or change of chief executive office, a fee of Twenty-five Dollars ($25.00);
(6) for filing a change of address for any individual or other person authorized to do business in this state designated by a partnership as its registered agent for service of process, or the change of name or the resignation of a registered agent, a fee of Twenty-five Dollars ($25.00) for the first forty partnerships and Five Dollars ($5.00) for each additional partnership within any bulk filing;
(7) for filing a statement of conversion, a fee of One Hundred Dollars ($100.00);
(8) for filing a statement of merger, a fee of One Hundred Dollars ($100.00); and
(9) for filing a fictitious name certificate, a fee of Fifty Dollars ($50.00), and for an amendment to the certificate, a fee of Twenty-five Dollars ($25.00).
(h) A partnership name filed in a statement pursuant to this act may not be the same as or indistinguishable from the name of any other partnership, corporation, limited liability company or limited partnership, trade name or fictitious name, or other name reserved with or on file with the Secretary of State.
(i) The provisions of subparagraph h of this paragraph shall not apply if one of the following is filed with the Secretary of State:
(1) the written consent of the other partnership, corporation, limited liability company, limited partnership, or holder of the trade name, fictitious name or other reserved name to use the same or indistinguishable name with the addition of one or more words, numerals, numbers or letters to make that name distinguishable upon the records of the Secretary of State, except that the addition of words, numerals, numbers or letters to make the name distinguishable shall not be required where such written consent states that the consenting entity is about to change its name, cease to do business, withdraw from the state or be wound up, or
(2) a certified copy of a final decree of a court of competent jurisdiction establishing the prior right of such partnership or holder of partnership name to the use of such name in this state.
(j) Any signature on any instrument authorized to be filed with the Secretary of State under any provision of this act may be by facsimile.
Added by Laws 1997, c. 399, § 6, eff. Nov. 1, 1997. Amended by Laws 2008, c. 253, § 33; Laws 2009, c. 447, § 5, eff. Jan. 1, 2010.
NOTE: Laws 2008, c. 382, § 315, which changed the effective date of Laws 2008, c. 253, §§ 1-47 to Jan. 1, 2010, was held unconstitutional by the Oklahoma Supreme Court in the case of Weddington v. Henry, 202 P.3d 143, 2008 OK 102 (2009).
§54-1-106. Governing Law.
Governing Law. (a) Except as otherwise provided in subsection (b) of this section, the law of the jurisdiction in which a partnership has its chief executive office governs relations among the partners and between the partners and the partnership.
(b) The law of this state governs relations among the partners and between the partners and the partnership and the liability of partners for an obligation of a limited liability partnership.
Added by Laws 1997, c. 399, § 7, eff. Nov. 1, 1997.
§54-1-107. Partnership subject to amendment or repeal of act.
Partnership subject to amendment or repeal of act. A partnership governed by this act is subject to any amendment or repeal of this act.
Added by Laws 1997, c. 399, § 8, eff. Nov. 1, 1997.
§54-1-201. Partnership as entity.
Partnership as entity. (a) A partnership is an entity distinct from its partners.
(b) A limited liability partnership continues to be the same entity that existed before the filing of a statement of qualification under Section 55 of this act.
Added by Laws 1997, c. 399, § 9, eff. Nov. 1, 1997.
§54-1-202. Formation of Partnership.
Formation of Partnership. (a) Except as otherwise provided in subsection (b) of this section, the association of two or more persons to carry on as co-owners a business for profit forms a partnership, whether or not the persons intend to form a partnership.
(b) An association formed under a statute other than this act, a predecessor statute, or a comparable statute of another jurisdiction is not a partnership under this act.
(c) In determining whether a partnership is formed, the following rules apply:
(1) Joint tenancy, tenancy in common, tenancy by the entireties, joint property, common property, or part ownership does not by itself establish a partnership, even if the co-owners share profits made by the use of the property.
(2) The sharing of gross returns does not by itself establish a partnership, even if the persons sharing them have a joint or common right or interest in property from which the returns are derived.
(3) A person who receives a share of the profits of a business is presumed to be a partner in the business, unless the profits were received in payment:
(i) of a debt by installments or otherwise;
(ii) for services as an independent contractor or of wages or other compensation to an employee;
(iii) of rent;
(iv) of an annuity or other retirement or health benefit to a beneficiary, representative, or designee of a deceased or retired partner;
(v) of interest or other charge on a loan, even if the amount of payment varies with the profits of the business, including a direct or indirect present or future ownership of the collateral, or rights to income, proceeds, or increase in value derived from the collateral; or
(vi) for the sale of the goodwill of a business or other property by installments or otherwise.
Added by Laws 1997, c. 399, § 10, eff. Nov. 1, 1997.
§54-1-203. Partnership Property.
Partnership Property. Property acquired by a partnership is property of the partnership and not of the partners individually.
Added by Laws 1997, c. 399, § 11, eff. Nov. 1, 1997.
§54-1-204. When Property is Partnership Property.
When Property is Partnership Property. (a) Property is partnership property if acquired in the name of:
(1) the partnership; or
(2) one or more partners with an indication in the instrument transferring title to the property of the person's capacity as a partner or of the existence of a partnership but without an indication of the name of the partnership.
(b) Property is acquired in the name of the partnership by a transfer to:
(1) the partnership in its name; or
(2) one or more partners in their capacity as partners in the partnership, if the name of the partnership is indicated in the instrument transferring title to the property.
(c) Property is presumed to be partnership property if purchased with partnership assets, even if not acquired in the name of the partnership or of one or more partners with an indication in the instrument transferring title to the property of the person's capacity as a partner or of the existence of a partnership.
(d) Property acquired in the name of one or more of the partners, without an indication in the instrument transferring title to the property of the person's capacity as a partner or of the existence of a partnership and without use of partnership assets, is presumed to be separate property, even if used for partnership purposes.
Added by Laws 1997, c. 399, § 12, eff. Nov. 1, 1997.
§54-1-301. Partner Agent of Partnership.
Partner Agent of Partnership. Subject to the effect of a statement of partnership authority under Section 15 of this act:
(1) Each partner is an agent of the partnership for the purpose of its business. An act of a partner, including the execution of an instrument in the partnership name, for apparently carrying on in the ordinary course the partnership business or business of the kind carried on by the partnership binds the partnership, unless the partner had no authority to act for the partnership in the particular matter and the person with whom the partner was dealing knew or had received a notification that the partner lacked authority.
(2) An act of a partner which is not apparently for carrying on in the ordinary course the partnership business or business of the kind carried on by the partnership binds the partnership only if the act was authorized by the other partners.
Added by Laws 1997, c. 399, § 13, eff. Nov. 1, 1997.
§54-1-302. Transfer of Partnership Property.
Transfer of Partnership Property. (a) Partnership property may be transferred as follows:
(1) Subject to the effect of a statement of partnership authority under Section 15 of this act, partnership property held in the name of the partnership may be transferred by an instrument of transfer executed by a partner in the partnership name.
(2) Partnership property held in the name of one or more partners with an indication in the instrument transferring the property to them of their capacity as partners or of the existence of a partnership, but without an indication of the name of the partnership, may be transferred by an instrument of transfer executed by the persons in whose name the property is held.
(3) Partnership property held in the name of one or more persons other than the partnership, without an indication in the instrument transferring the property to them of their capacity as partners or of the existence of a partnership, may be transferred by an instrument of transfer executed by the persons in whose name the property is held.
(b) A partnership may recover partnership property from a transferee only if it proves that execution of the instrument of initial transfer did not bind the partnership under Section 13 of this act and:
(1) as to a subsequent transferee who gave value for property transferred under paragraphs (1) and (2) of subsection (a) of this section, proves that the subsequent transferee knew or had received a notification that the person who executed the instrument of initial transfer lacked authority to bind the partnership; or
(2) as to a transferee who gave value for property transferred under paragraph (3) of subsection (a) of this section, proves that the transferee knew or had received a notification that the property was partnership property and that the person who executed the instrument of initial transfer lacked authority to bind the partnership.
(c) A partnership may not recover partnership property from a subsequent transferee if the partnership would not have been entitled to recover the property, under subsection (b) of this section, from any earlier transferee of the property.
(d) If a person holds all of the partners' interests in the partnership, all of the partnership property vests in that person. The person may execute a document in the name of the partnership to evidence vesting of the property in that person and may file or record the document.
Added by Laws 1997, c. 399, § 14, eff. Nov. 1, 1997.
§54-1-303. Statement of Partnership Authority.
Statement of Partnership Authority. (a) A partnership may file with the Secretary of State a statement of partnership authority, which:
(1) must include:
(i) the name of the partnership;
(ii) the street address of its chief executive office and of one office in this state, if there is one; and
(iii) the name and mailing address of an agent appointed and maintained by the partnership for the purpose of subsection (b) of this section; or
(iv) the names and mailing addresses of the partners authorized to execute an instrument transferring real property held in the name of the partnership; and
(2) may state the authority, or limitations on the authority, of some or all of the partners to enter into other transactions on behalf of the partnership and any other matter.
(b) If a statement of partnership authority names an agent, the agent shall maintain a list of the names and mailing addresses of all of the partners and make it available to any person on request for good cause shown.
(c) If a filed statement of partnership authority is executed pursuant to subsection (c) of Section 6 of this act and states the name of the partnership but does not contain all of the other information required by subsection (a) of this section, the statement nevertheless operates with respect to a person not a partner as provided in subsections (d) and (e) of this section.
(d) Except as otherwise provided in subsection (g) of this section, a filed statement of partnership authority supplements the authority of a partner to enter into transactions on behalf of the partnership as follows:
(1) Except for transfers of real property, a grant of authority contained in a filed statement of partnership authority is conclusive in favor of a person who gives value without knowledge to the contrary, so long as and to the extent that a limitation on that authority is not then contained in another filed statement. A filed cancellation of a limitation on authority revives the previous grant of authority.
(2) A grant of authority to transfer real property held in the name of the partnership contained in a certified copy of a filed statement of partnership authority recorded in the office for recording transfers of that real property is conclusive in favor of a person who gives value without knowledge to the contrary, so long as and to the extent that a certified copy of a filed statement containing a limitation on that authority is not then of record in the office for recording transfers of that real property. The recording in the office for recording transfers of that real property of a certified copy of a filed cancellation of a limitation on authority revives the previous grant of authority.
(e) A person not a partner is deemed to know of a limitation on the authority of a partner to transfer real property held in the name of the partnership if a certified copy of the filed statement containing the limitation on authority is of record in the office for recording transfers of that real property.
(f) Except as otherwise provided in subsections (d) and (e) of this section and Sections 38 and 44 of this act, a person not a partner is not deemed to know of a limitation on the authority of a partner merely because the limitation is contained in a filed statement.
(g) Unless earlier canceled, a filed statement of partnership authority is canceled by operation of law five (5) years after the date on which the statement, or the most recent amendment, was filed with the Secretary of State.
Added by Laws 1997, c. 399, § 15, eff. Nov. 1, 1997.
§54-1-304. Statement of Denial.
Statement of Denial. A partner or other person named as a partner in a filed statement of partnership authority or in a list maintained by an agent pursuant to subsection (b) of Section 15 of this act may file with the Secretary of State a statement of denial stating the name of the partnership and the fact that is being denied, which may include denial of a person's authority or status as a partner. A statement of denial is a limitation on authority as provided in subsections (d) and (e) of Section 15 of this act.
Added by Laws 1997, c. 399, § 16, eff. Nov. 1, 1997.
§54-1-305. Partnership Liable for Partner's Actionable Conduct.
Partnership Liable for Partner's Actionable Conduct. (a) A partnership is liable for loss or injury caused to a person, or for a penalty incurred, as a result of a wrongful act or omission, or other actionable conduct, of a partner acting in the ordinary course of business of the partnership or with authority of the partnership.
(b) If, in the course of the partnership's business or while acting with authority of the partnership, a partner receives or causes the partnership to receive money or property of a person not a partner, and the money or property is misapplied by a partner, the partnership is liable for the loss.
Added by Laws 1997, c. 399, § 17, eff. Nov. 1, 1997.
§54-1-306. Partner's liability.
Partner's liability. (a) Except as otherwise provided in subsections (b) and (c) of this section, all partners are liable jointly and severally for all obligations of the partnership unless otherwise agreed by the claimant or provided by law.
(b) A person admitted as a partner into an existing partnership is not personally liable for any partnership obligation incurred before the person's admission as a partner.
(c) An obligation of a partnership incurred while the partnership is a limited liability partnership, whether arising in contract, tort, or otherwise, is solely the obligation of the partnership. A partner is not personally liable, directly or indirectly, by way of contribution or otherwise, for such an obligation solely by reason of being or so acting as a partner. This subsection applies notwithstanding anything inconsistent in the partnership agreement that existed immediately before the vote required to become a limited liability partnership under subsection (b) of Section 55 of this act.
Added by Laws 1997, c. 399, § 18, eff. Nov. 1, 1997.
§54-1-307. Actions By and Against Partnership and Partners.
Actions By and Against Partnership and Partners. (a) A partnership may sue and be sued in the name of the partnership.
(b) An action may be brought against the partnership and, to the extent not inconsistent with Section 18 of this act, any or all of the partners in the same action or in separate actions.
(c) A judgment against a partnership is not by itself a judgment against a partner. A judgment against a partnership may not be satisfied from a partner's assets unless there is also a judgment against the partner.
(d) A judgment creditor of a partner may not levy execution against the assets of the partner to satisfy a judgment based on a claim against the partnership unless the partner is personally liable for the claim under Section 18 of this act and:
(1) a judgment based on the same claim has been obtained against the partnership and a writ of execution on the judgment has been returned unsatisfied in whole or in part;
(2) the partnership is a debtor in bankruptcy;
(3) the partner has agreed that the creditor need not exhaust partnership assets;
(4) a court grants permission to the judgment creditor to levy execution against the assets of a partner based on a finding that partnership assets subject to execution are clearly insufficient to satisfy the judgment, that exhaustion of partnership assets is excessively burdensome, or that the grant of permission is an appropriate exercise of the court's equitable powers; or
(5) liability is imposed on the partner by law or contract independent of the existence of the partnership.
(e) This section applies to any partnership liability or obligation resulting from a representation by a partner or purported partner under Section 20 of this act.
Added by Laws 1997, c. 399, § 19, eff. Nov. 1, 1997.
§54-1-308. Liability of Purported Partner.
Liability of Purported Partner. (a) If a person, by words or conduct, purports to be a partner, or consents to being represented by another as a partner, in a partnership or with one or more persons not partners, the purported partner is liable to a person to whom the representation is made, if that person, relying on the representation, enters into a transaction with the actual or purported partnership. If the representation, either by the purported partner or by a person with the purported partner's consent, is made in a public manner, the purported partner is liable to a person who relies upon the purported partnership even if the purported partner is not aware of being held out as a partner to the claimant. If partnership liability results, the purported partner is liable with respect to that liability as if the purported partner were a partner. If no partnership liability results, the purported partner is liable with respect to that liability jointly and severally with any other person consenting to the representation.
(b) If a person is thus represented to be a partner in an existing partnership, or with one or more persons not partners, the purported partner is an agent of persons consenting to the representation to bind them to the same extent and in the same manner as if the purported partner were a partner, with respect to persons who enter into transactions in reliance upon the representation. If all of the partners of the existing partnership consent to the representation, a partnership act or obligation results. If fewer than all of the partners of the existing partnership consent to the representation, the person acting and the partners consenting to the representation are jointly and severally liable.
(c) A person is not liable as a partner merely because the person is named by another in a statement of partnership authority.
(d) A person does not continue to be liable as a partner merely because of a failure to file a statement of dissociation or to amend a statement of partnership authority to indicate the partner's dissociation from the partnership.
(e) Except as otherwise provided in subsections (a) and (b) of this section, persons who are not partners as to each other are not liable as partners to other persons.
Added by Laws 1997, c. 399, § 20, eff. Nov. 1, 1997.
§54-1-309. Security for Payment of Claims.
Security for Payment of Claims. (a) A limited liability partnership, or a foreign limited liability partnership transacting business in this state, shall provide security for claims against it based upon acts, errors, or omissions arising out of the conduct of the business of the partnership in the manner provided in subsection (b), (c), (d) or (e) of this section.
(b) (1) A limited liability partnership or foreign limited liability partnership is in compliance with this section if it maintains a policy or policies of insurance against liability imposed on it by law for damages arising out of claims of the type specified in subsection (a) of this section. The policy or policies of insurance may be issued on a claims-made or occurrence basis; provided, that the total aggregate limit of liability thereof equals or exceeds Five Hundred Thousand Dollars ($500,000.00). The impairment or exhaustion of such aggregate limit of liability by amounts paid under the policy in connection with the settlement, discharge, or defense of claims shall not require the partnership to acquire additional insurance coverage for the policy period to which the impairment or exhaustion applies. Such policy or policies of insurance may be of a type reasonably available in the commercial insurance market and may be subject to such terms, conditions, exclusions, and endorsements as are typically contained in such policies.
(2) If the principal business activity of a limited liability partnership or foreign limited liability partnership is not the provision of professional services, the limited liability partnership or foreign limited liability partnership may comply with this section if it maintains a general liability insurance policy or policies in the aggregate amount of at least Five Hundred Thousand Dollars ($500,000.00). The impairment or exhaustion of such aggregate limit of liability by amounts paid under the policy in connection with the settlement, discharge, or defense of claims shall not require the partnership to acquire additional insurance coverage for the policy period to which the impairment or exhaustion applies. Such policy or policies of insurance may be of a type reasonably available in the commercial insurance market and may be subject to such terms, conditions, exclusions, and endorsements as are typically contained in such policies.
(3) A policy or policies of insurance maintained pursuant to this subsection may be subject to a deductible or self-insured retention not to exceed ten percent (10%) of the aggregate limit of liability specified in paragraphs (1) and (2) of this subsection; provided, however, that a deductible or self-insured retention may exceed such amount if the partnership maintains funds in the manner provided for in subsection (c) of this section in the amount of the difference between the actual deductible or self-insured retention and such amount.
(c) (1) A limited liability partnership or foreign limited liability partnership is in compliance with this section if it maintains funds specifically designated and segregated as security for the payment of liabilities imposed by law against the partnership or its partners arising out of claims of the type specified in subsection (a) of this section, in the aggregate amount of at least Five Hundred Thousand Dollars ($500,000.00). The partnership remains in compliance with this section notwithstanding amounts paid from the designated and segregated funds in any six-month period in settling or discharging such claims; provided, that the amount of the designated and segregated funds is increased to at least Five Hundred Thousand Dollars ($500,000.00) as of the first business day of the next six-month period. A limited liability partnership or foreign limited liability partnership is in compliance with this subsection if it:
(i) maintains funds in the required amount in trust or in bank escrow in the form of cash, bank certificates of deposit or United States Treasury obligations,
(ii) maintains in effect bank letters of credit in the required amount, or
(iii) maintains in effect insurance or surety company bonds in the required amount.
(2) Notwithstanding the pendency of other claims against the partnership, a limited liability partnership or foreign limited liability partnership shall be deemed to be in compliance with this subsection if within thirty (30) days after the time that a claim is initially asserted through service of a summons, complaint or comparable pleading in a judicial or administrative proceeding, the partnership has designated and segregated funds in compliance with the requirement of paragraph (1) of this subsection.
(d) For purposes of satisfying the requirements of this section, a limited liability partnership or foreign limited liability partnership may aggregate security provided pursuant to subsections (b) and (c) of this section.
(e) Notwithstanding any other provision of this section, if a foreign limited liability partnership maintains liability insurance, designated and segregated funds, or any combination thereof pursuant to the laws or regulations of another jurisdiction, such liability insurance, designated and segregated funds, or combination thereof shall be deemed to satisfy this section if:
(1) The amount thereof is equal to or greater than the amount required pursuant to this section; or
(2) The amount thereof, plus any security maintained pursuant to subsection (b) or (c) of this section, is equal to or greater than the amount required pursuant to this section.
(f) Federal or state law, as applicable, shall determine whether the existence of the security required by subsection (b) or (c) of this section or the amount of such security may be revealed pursuant to the law of civil procedure governing discovery in civil cases or whether the existence or amount of that security may be admitted into evidence for consideration by a trier of fact during a civil proceeding.
(g) If a limited liability partnership or foreign limited liability partnership fails to comply with this section, the partners thereof shall be liable jointly for the debts, obligations and liabilities of the partnership arising from claims specified in subsection (a) of this section; provided, however, that the aggregate amount for which the partners are jointly liable shall be limited to the difference between the amount of security required to be maintained pursuant to this section and the amount of security actually maintained by the partnership.
(h) Notwithstanding any other provision of this section, if a limited liability partnership or foreign limited liability partnership is in substantial compliance with this section at the time that a bankruptcy or other insolvency proceeding is commenced with respect to the partnership, the partnership shall be deemed to be in compliance with this section during the entire pendency of the proceeding. A partnership that has been the subject of such a proceeding and that conducts business after the proceeding has ended must thereafter comply with this section in order to maintain its status as a limited liability partnership or foreign limited liability partnership.
Added by Laws 1997, c. 399, § 21, eff. Nov. 1, 1997.
§54-1-401. Partner's Rights and Duties.
Partner's Rights and Duties. (a) Each partner is deemed to have an account that is:
(1) credited with an amount equal to the money plus the value of any other property, net of the amount of any liabilities, the partner contributes to the partnership and the partner's share of the partnership profits; and
(2) charged with an amount equal to the money plus the value of any other property, net of the amount of any liabilities, distributed by the partnership to the partner and the partner's share of the partnership losses.
(b) Each partner is entitled to an equal share of the partnership profits and is chargeable with a share of the partnership losses in proportion to the partner's share of the profits.
(c) A partnership shall reimburse a partner for payments made and indemnify a partner for liabilities incurred by the partner in the ordinary course of the business of the partnership or for the preservation of its business or property.
(d) A partnership shall reimburse a partner for an advance to the partnership beyond the amount of capital the partner agreed to contribute.
(e) A payment or advance made by a partner which gives rise to a partnership obligation under subsection (c) or (d) of this section constitutes a loan to the partnership which accrues interest from the date of the payment or advance.
(f) Each partner has equal rights in the management and conduct of the partnership business.
(g) A partner may use or possess partnership property only on behalf of the partnership.
(h) A partner is not entitled to remuneration for services performed for the partnership, except for reasonable compensation for services rendered in winding up the business of the partnership.
(i) A person may become a partner only with the consent of all of the partners.
(j) A difference arising as to a matter in the ordinary course of business of a partnership may be decided by a majority of the partners. An act outside the ordinary course of business of a partnership and an amendment to the partnership agreement may be undertaken only with the consent of all of the partners.
(k) This section does not affect the obligations of a partnership to other persons under Section 13 of this act.
Added by Laws 1997, c. 399, § 22, eff. Nov. 1, 1997.
§54-1-402. Distributions in Kind.
Distributions in Kind. A partner has no right to receive, and may not be required to accept, a distribution in kind.
Added by Laws 1997, c. 399, § 23, eff. Nov. 1, 1997.
§54-1-403. Partner's Rights and Duties with Respect to Information.
Partner's Rights and Duties with Respect to Information. (a) A partnership shall keep its books and records, if any, at its chief executive office.
(b) A partnership shall provide partners and their agents and attorneys access to its books and records. It shall provide former partners and their agents and attorneys access to books and records pertaining to the period during which they were partners. The right of access provides the opportunity to inspect and copy books and records during ordinary business hours. A partnership may impose a reasonable charge, covering the costs of labor and material, for copies of documents furnished.
(c) Each partner and the partnership shall furnish to a partner, and to the legal representative of a deceased partner or partner under legal disability:
(1) without demand, any information concerning the partnership's business and affairs reasonably required for the proper exercise of the partner's rights and duties under the partnership agreement or this act; and
(2) on demand, any other information concerning the partnership's business and affairs, except to the extent the demand or the information demanded is unreasonable or otherwise improper under the circumstances.
Added by Laws 1997, c. 399, § 24, eff. Nov. 1, 1997.
§54-1-404. General Standards of Partner's Conduct.
General Standards of Partner's Conduct. (a) The only fiduciary duties a partner owes to the partnership and the other partners are the duty of loyalty and the duty of care set forth in subsections (b) and (c) of this section.
(b) A partner's duty of loyalty to the partnership and the other partners is limited to the following:
(1) to account to the partnership and hold as trustee for it any property, profit, or benefit derived by the partner in the conduct and winding up of the partnership business or derived from a use by the partner of partnership property, including the appropriation of a partnership opportunity;
(2) to refrain from dealing with the partnership in the conduct or winding up of the partnership business as or on behalf of a party having an interest adverse to the partnership; and
(3) to refrain from competing with the partnership in the conduct of the partnership business before the dissolution of the partnership.
(c) A partner's duty of care to the partnership and the other partners in the conduct and winding up of the partnership business is limited to refraining from engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law.
(d) A partner shall discharge the duties to the partnership and the other partners under this act or under the partnership agreement and exercise any rights consistently with the obligation of good faith and fair dealing.
(e) A partner does not violate a duty or obligation under this act or under the partnership agreement merely because the partner's conduct furthers the partner's own interest.
(f) A partner may lend money to and transact other business with the partnership, and as to each loan or transaction the rights and obligations of the partner are the same as those of a person who is not a partner, subject to other applicable law.
(g) This section applies to a person winding up the partnership business as the personal or legal representative of the last surviving partner as if the person were a partner.
Added by Laws 1997, c. 399, § 25, eff. Nov. 1, 1997.
§54-1-405. Actions by Partnership and Partners.
Actions by Partnership and Partners. (a) A partnership may maintain an action against a partner for a breach of the partnership agreement, or for the violation of a duty to the partnership, causing harm to the partnership.
(b) A partner may maintain an action against the partnership or another partner for legal or equitable relief, with or without an accounting as to partnership business, to:
(1) enforce the partner's rights under the partnership agreement;
(2) enforce the partner's rights under this act, including:
(i) the partner's rights under Sections 22, 24, or 25 of this act;
(ii) the partner's right on dissociation to have the partner's interest in the partnership purchased pursuant to Section 35 of this act or enforce any other right under Article 6 or 7 of this act; or
(iii) the partner's right to compel a dissolution and winding up of the partnership business under Section 40 of this act or enforce any other right under Article 8 of this act; or
(3) enforce the rights and otherwise protect the interests of the partner, including rights and interests arising independently of the partnership relationship.
(c) The accrual of, and any time limitation on, a right of action for a remedy under this section is governed by other law. A right to an accounting upon a dissolution and winding up does not revive a claim barred by law.
Added by Laws 1997, c. 399, § 26, eff. Nov. 1, 1997.
§54-1-406. Continuation of Partnership beyond Definite Term or Particular Undertaking.
Continuation of Partnership beyond Definite Term or Particular Undertaking. (a) If a partnership for a definite term or particular undertaking is continued, without an express agreement, after the expiration of the term or completion of the undertaking, the rights and duties of the partners remain the same as they were at the expiration or completion, so far as is consistent with a partnership at will.
(b) If the partners, or those of them who habitually acted in the business during the term or undertaking, continue the business without any settlement or liquidation of the partnership, they are presumed to have agreed that the partnership will continue.
Added by Laws 1997, c. 399, § 27, eff. Nov. 1, 1997.
§54-1-501. Partner not Co-owner of Partnership Property.
Partner not Co-owner of Partnership Property. A partner is not a co-owner of partnership property and has no interest in partnership property which can be transferred, either voluntarily or involuntarily.
Added by Laws 1997, c. 399, § 28, eff. Nov. 1, 1997.
§54-1-502. Partner's Transferable Interest in Partnership.
Partner's Transferable Interest in Partnership. The only transferable interest of a partner in the partnership is the partner's share of the profits and losses of the partnership and the partner's right to receive distributions. The interest is personal property.
Added by Laws 1997, c. 399, § 29, eff. Nov. 1, 1997.
§54-1-503. Transfer of Partner's Transferable Interest.
Transfer of Partner's Transferable Interest. (a) A transfer, in whole or in part, of a partner's transferable interest in the partnership:
(1) is permissible;
(2) does not by itself cause the partner's dissociation or a dissolution and winding up of the partnership business; and
(3) does not, as against the other partners or the partnership, entitle the transferee, during the continuance of the partnership, to participate in the management or conduct of the partnership business, to require access to information concerning partnership transactions, or to inspect or copy the partnership books or records.
(b) A transferee of a partner's transferable interest in the partnership has a right:
(1) to receive, in accordance with the transfer, distributions to which the transferor would otherwise be entitled;
(2) to receive upon the dissolution and winding up of the partnership business, in accordance with the transfer, the net amount otherwise distributable to the transferor; and
(3) to seek under paragraph (6) of Section 40 of this act a judicial determination that it is equitable to wind up the partnership business.
(c) In a dissolution and winding up, a transferee is entitled to an account of partnership transactions only from the