O.C.G.A. § 14-8-39 (2019)
Rescission of partnership agreement following fraud or misrepresentation
Where a partnership agreement is rescinded on the ground of the fraud or misrepresentation of one of the parties thereto the party entitled to rescind is, without prejudice to any other right, entitled: (1) To a lien on, or a right of retention of, the surplus of the partnership property after satisfying the partnership liabilities to third persons for any sum of money paid by him for the purchase of an interest in the partnership and for any capital or advances contributed by him; (2) To stand, after all liabilities to third persons have been satisfied, in the place of the creditors of the partnership for any payments made by him in respect of the partnership liabilities; and (3) To be indemnified by the person guilty of the fraud or making the representation against all debts and liabilities of the partnership.
History
(Code 1981, § 14-8-39, enacted by Ga. L. 1984, p. 1439, § 1.)
Annotations
COMMENT Note to Uniform Partnership Act This section defines the rights of a partner who has been misled into partnership by the fraud of a copartner. The defrauded partner is entitled to the return out of partnership property of payments he has made to the partnership and to others, subject only to the rights of third party creditors; protection as against his copartners from the burden of all partnership liabilities; reimbursement from the partnership and the other partners of amounts paid by him to creditors; and indemnification by the defrauding partner. Note that the defrauded partner’s rights to return of payments and reimbursement are prior to the rights of both the defrauding and innocent partners. Prior Georgia Law There was no comparable provision or case law. Official UPA This section is the same as the official version except that ‘‘agreement’’ is substituted for ‘‘contract.’’ Cross-References Partners’ liability for partnership obligations: § 14-8-15. Partners’ right to indemnification: § 14-8-18(2). Partners’ duty to disclose: § 14-8-20. Partners’ duty of contribution: § 14-8-40(4)-(7).
CORPORATIONS & PARTNERSHIPS
RESEARCH REFERENCES Am. Jur. 2d. - 59A Am. Jur. 2d, Partnership, § 382, 383.
C.J.S. - 68 C.J.S., Partnership, § 21 et seq.