TITLE 14 CORPORATIONS, PARTNERSHIPS, AND ASSOCIATIONS

Section 8. Partnerships, 14-8-1 through 14-8-64.

ARTICLE 3 CORPORATIONS ORGANIZED FOR RELIGIOUS, FRATERNAL, OR EDUCATIONAL PURPOSES

14-8-31. Causation of dissolution.

Dissolution is caused:
1. By the termination of the definite term or particular undertaking specified in the agreement;
2. By the express will or withdrawal of any partner;
3. By the expulsion of any partner from the business in accordance with the terms of the agreement between the partners;
4. By any event which makes it unlawful for the business of the partnership to be carried on or for the members to carry it on in partnership;
5. By the death of any partner, unless there is a written agreement between the partners expressly providing otherwise;
6. By decree of court under Code Section 14-8-32;
7. In other circumstances as provided in the agreement between the partners.
Unless otherwise provided in the partnership agreement, dissolution is not caused solely by admission of a new partner.
Subject to contrary agreement of the partners, a dissolution is not in contravention of the partnership agreement if it is caused at any time by the express will of all of the partners who have not assigned their interests or suffered them to be charged for their separate debts.

(Code 1981, §14-8-31, enacted by Ga. L. 1984, p. 1439, § 1; Ga. L. 1985, p. 1436, § 2.)

COMMENT

Note to Uniform Partnership Act This section states the events that cause dissolution, as well as one non-cause of dissolution - admission of a partner.

Prior Georgia Law Paragraph (a)(1): This cause was specified in prior O.C.G.A. § 14-8-24(b).

Paragraph (a)(2): This is inconsistent with prior Georgia law, which permitted dissolution by express will of a partner only in a partnership at will, and then only upon three months notice (prior O.C.G.A. § 14-8-24(a)) or with the consent of all of the other partners (prior O.C.G.A. § 14-8-90).

Paragraph (a)(3): There was no comparable provision. Prior case law was consistent. See Heard v. Carter, 159 Ga. App. 801, 285 S.E.2d 146 (1981).

Paragraph (a)(4): There was no comparable provision or case law.

Paragraph (a)(5): This cause was specified in prior O.C.G.A. §§ 14-8-24(b) and14-8-90. The latter provision, like new paragraph (a)(5), provided that the partners could avoid dissolution by contrary agreement.

Paragraph (a)(6): See the Comment to § 14-8-32.

Paragraph (a)(7): There was no comparable provision or case law.

Subsection (b): There was no comparable provision and prior case law was apparently inconsistent. See Fenner & Beane v. Nelson, 64 Ga. App. 600, 13 S.E.2d 694 (1941).

Subsection (c): There was no comparable provision.

An additional cause of dissolution under prior Georgia case law but not under new § 14-8-31 was bankruptcy of a partner or of the partnership. See Meinhard, Schaul & Co. v. Folsom Bros., 3 Ga. App. 251, 59 S.E. 830 (1907).

Official UPA This section has been substantially changed from the official version. The distinction between causes in contravention of the partnership agreement and those not in contravention has been deleted, in order to clarify that the parties' agreement and not the Act should control. Accordingly, the lead-in to official subsection 31(1), official subsections 31(1)(c) and 31(2), and the reference to "definite term or particular undertaking" in official subsection 31(1)(b) have been deleted, since all of this language was relevant only to whether the dissolution was "in contravention." However, subsection (c) has been added in order to clarify that, in the absence of contrary agreement, a dissolution is not in contravention when it is opposed only by assigned or charged partners. The reference to partner withdrawal has been added to paragraph (a)(2). Bankruptcy of a partner or of the partnership has been deleted as a cause of dissolution. Paragraph (a)(5) has been changed from official subsection 31(4) to permit the partners to avoid dissolution upon death of a partner. Paragraph (a)(7) has been added. Finally, subsection (b) has been added in order to specifically reverse the contrary implication in Fenner & Beane v. Nelson, supra.

Cross-References Continuation of partnership after expiration of agreed term: § 14-8-23. Assignment of partnership interest as not causing dissolution: § 14-8-27(b). Definition of dissolution: § 14-8-29. Dissolution distinguished from termination and winding up: § 14-8-30. Grounds of dissolution by decree of court: § 14-8-32. Consequences of dissolution: § 14-8-33 et seq.

JUDICIAL DECISIONS

Editor's notes.

- In light of the similarity of the statutory provisions, decisions under former Civil Code 1910, § 3176, former Code 1933, § 75-107, and former Code Sections 14-8-47 and 14-8-90, in effect prior to the 1984 repeal and reenactment of this chapter, are included in the annotations to this Code section.

When "dissolution" is absolute.

- "Dissolution" of partnership caused by the death of a partner, as the term is used, is not absolute until the partnership becomes extinct by complete winding up of all its affairs by the surviving partner or partners. Ledbetter v. Farrar Lumber Co., 177 Ga. 779, 171 S.E. 374 (1933) (decided under former Civil Code 1910, § 3176).

Stipulation that partnership is not dissolved by partner's death.

- Every partnership is dissolved by the death of one of the partners unless the partnership articles stipulate otherwise, or the terms of a valid will clearly and unambiguously show a contrary intention, and such is satisfactory to the surviving partner. Kinney v. Robinson, 181 Ga. 837, 184 S.E. 616 (1939) (decided under former Code 1933, § 75-107).

Liability for wrongful dissolution.

- One partner's exercise of the right to terminate the partnership, if done in bad faith for the purpose of appropriating to that partner's benefit the prosperity of the partnership, would be a violation of the partnership agreement and would constitute wrongful dissolution of the partnership. Wilensky v. Blalock, 262 Ga. 95, 414 S.E.2d 1 (1992).

Court of appeals erred in granting an attorney's motion for summary judgment in its action to dissolve a partnership because it cited disapproved language that the tort of wrongful dissolution of a partnership required the attempt to appropriate the "new prosperity" of the partnership; the gravamen of a wrongful dissolution claim is a partner's attempt to appropriate, through the dissolution, the assets or business of the partnership, which may include prospective business, without adequate compensation to the remaining partners. Jordan v. Moses, 291 Ga. 39, 727 S.E.2d 460 (2012).

RESEARCH REFERENCES

Am. Jur. 2d.

- 59A Am. Jur. 2d, Partnership, § 507 et seq.

C.J.S.

- 68 C.J.S., Partnership, § 404 et seq.

ALR.

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

Misconduct of or dissensions among partners or joint adventurers as ground for dissolution by court, 118 A.L.R. 1421.

Sale or transfer of interest by partner as dissolving partnership, 75 A.L.R.2d 1036.

Construction and application of expulsion provision in partnership agreement between attorneys, 72 A.L.R.3d 1226.

Construction and application of expulsion provision in medical partnership agreement, 87 A.L.R.3d 328.

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