ART 1830.

Reasons why a partnership might be dissolved

1. Without Breaking the Agreement:
a. End of Term or Project: The partnership ends when the time period or specific
project mentioned in the agreement is completed.
b. Partner's Choice: Any partner can choose to end the partnership if there's no set
time or project, but they must do so honestly and in good faith.
c. Mutual Agreement: All partners who haven’t transferred their interests to others
can agree to end the partnership.
d. Expulsion of a Partner: If the agreement allows, a partner can be expelled from
the partnership, leading to dissolution.
2. Breaking the Agreement:
● A partner can choose to dissolve the partnership even if it goes against the
agreement, but only if no other conditions for dissolution are met.
3. Illegal Business:
● If something happens that makes it illegal for the partnership to continue its
business, the partnership must dissolve.
4. Loss of Specific Property:
● If a partner promised to contribute a specific item that is lost or destroyed
before being delivered to the partnership, or if the partnership only had the right
to use the item and it is lost, the partnership might dissolve. However, if the
partnership owns the item and it is lost after ownership, the partnership doesn't
dissolve.
5. Death of a Partner:
● The partnership dissolves if any partner dies.
6. Insolvency:
● If any partner or the entire partnership becomes insolvent (can’t pay debts), the
partnership is dissolved.
7. Civil Interdiction:
● If any partner is legally barred from managing their own affairs (civil
interdiction), the partnership is dissolved.
8. Court Order:
● The partnership can be dissolved by a court decision under certain conditions.
ART. 1831. When a court can step in and dissolve a partnership if certain issues arise
When a Partner Requests Dissolution:
1. Mental Incapacity: If a partner has been legally declared insane or is proven to be of
unsound mind.
2. Incapacity to Perform: If a partner becomes unable to fulfill their role in the partnership
for any reason.
3. Harmful Behavior: If a partner's actions are damaging to the business.
4. Breaching the Agreement: If a partner consistently breaks the partnership agreement
or behaves in a way that makes it impossible to work with them.
5. Business Losses: If the partnership can only continue by incurring losses.
6. Fairness: If other circumstances make it fair or reasonable to dissolve the partnership.
When Someone Buys a Partner's Interest:
1. After a Specific Term or Project Ends: If the partnership was set to last for a specific
time or project, and that has ended.
2. At Any Time for Partnerships at Will: If the partnership was "at will" (meaning it didn’t
have a set end date), the purchaser can ask for dissolution at any time.

ART. 1833. What happens to the liabilities of a partnership when it dissolves due to the
actions, death, or insolvency of a partner
1. Liability After Dissolution:
○ Each partner is still responsible for their share of any debts or liabilities created
by any partner, as if the partnership had not been dissolved. This means that
even after dissolution, the partners may still have to pay off debts that were
incurred.
2. Exceptions:
○ If a partner caused the dissolution (like leaving the partnership): The remaining
partners are not liable for any new debts if they knew about the dissolution.
○ If the dissolution was due to death or insolvency: The remaining partners are
not liable for new debts if they knew about the partner's death or insolvency.
ART. 1834. What happens after a partnership dissolves, specifically how partners can still
bind the partnership
After a Partnership Dissolves:
1. Continuing to Bind the Partnership:
○A partner can still bind the partnership by:
■ Winding Up: Doing things necessary to wrap up the partnership’s business.
■ Finishing Unfinished Business: Completing deals or transactions that were
already in progress when the partnership dissolved.
■ New Transactions: Entering into new deals that would have bound the
partnership before dissolution, as long as the other party:
■ Had worked with the partnership before dissolution and didn't know it had
dissolved.
■ Knew about the partnership but didn’t know it had dissolved, and there
was no public notice of the dissolution.
2. Exceptions (When a Partner Can't Bind the Partnership):
○ The partnership is not bound by a partner's actions if:
■ Illegality: The partnership was dissolved because continuing the business
became illegal, except for actions that wrap up the business.
■ Insolvency: The partner who acts is insolvent.
■ No Authority: The partner had no authority to wind up the business, unless the
other party:
■ Had previously extended credit to the partnership and didn’t know the
partner lacked authority.
■ Hadn’t extended credit but didn’t know about the lack of authority, and
there was no public notice of it.
3. Representation After Dissolution:
○ If a person represents themselves or allows others to represent them as a partner
in a dissolved partnership, they can still be liable under certain conditions, as
explained in Article 1825.
ART. 1835. What happens to a partner's liabilities when a partnership dissolves
1. Liabilities Continue:
● When a partnership dissolves, it doesn't automatically erase the debts or liabilities that
a partner had while the partnership was active. The partner is still responsible for those
existing liabilities.
2. Discharge of Liabilities:
● A partner can be released from these liabilities if there’s an agreement between the
partner, the creditor (the person or entity owed money), and the person or partnership
that continues the business.
● This agreement can be explicit (everyone agrees clearly) or implied through the
actions and dealings of the creditor with the new business or partner.
3. Liability After a Partner's Death:
● If a partner dies, their personal assets can be used to pay off any partnership debts
that were incurred while they were alive. However, their personal debts
(non-partnership related) take priority and must be paid first.

ART. 1836. Who has the right to "wind up" a partnership's affairs after it dissolves
UNDERSTANDABLE IN BOOK

ART. 1837. Rights of partners when a partnership dissolves.

1. Dissolution According to the Agreement:
● Right to Settle Debts: When a partnership ends according to the agreement, each
partner has the right to have the partnership's assets used to pay off debts. Any leftover
money (surplus) is then divided among the partners according to what they are owed.
● Expulsion of a Partner: If a partner is expelled fairly under the agreement, and if they
are freed from all partnership debts, they only get the net amount owed to them, paid
in cash.
2. Dissolution Against the Agreement (Wrongful Dissolution):
● Rights of Non-Wrongful Partners:
○ Same Rights as Above: The partners who didn’t cause the wrongful dissolution
still have the right to settle debts and get their share of the surplus.
○ Claim for Damages: These partners can also claim damages from the partner
who wrongfully caused the dissolution.
○ Continuing the Business: If all non-wrongful partners agree, they can continue
the business under the same name. They can take over the partnership’s
property if they either secure payment or pay off the partner who caused the
dissolution for their share, minus any damages owed.
● Rights of the Wrongful Partner:
○ If Business Continues: The partner who wrongfully dissolved the partnership
can have their share’s value paid to them in cash (minus any damages), but
they won’t be considered for the business's goodwill (reputation value). They
must also be freed from any partnership debts.
○ If Business Does Not Continue: They have the same rights as other partners to
settle debts and receive their share, but they’re still liable for damages.
ART. 1838. What happens when a partnership agreement is cancelled (rescinded) because
one of the partners committed fraud or made false representations
When a Partnership Is Canceled Due to Fraud or Misrepresentation:
If a partnership is ended because one partner acted deceitfully or misrepresented themselves,
the affected (honest) partner has certain rights to protect their interests:
1. Right to a Lien or Retention on Surplus Property:
○ What This Means: The honest partner can hold onto any leftover partnership
assets after all the partnership's debts to outsiders are paid. This hold (called a
lien or right of retention) is specifically for:
■ Money Paid for Partnership Interest: Any money the honest partner paid
to buy into the partnership.
■ Capital or Advances Contributed: Any personal funds the honest
partner put into the partnership or lent to it.
○ In Simple Terms: If the partnership ends because someone lied or cheated, the
honest partner can keep some of the remaining partnership assets to recover
the money they invested or loaned to the partnership.
2. Priority in Receiving Payments After Debts Are Paid:
○ What This Means: Once all the partnership's debts to third parties (like suppliers
or lenders) are settled, the honest partner gets priority in receiving any
remaining money. Essentially, they step into the shoes of the partnership's
creditors concerning the payments they made for the partnership's obligations.
○ In Simple Terms: After paying off all the partnership’s external debts, the honest
partner gets first dibs on any leftover money, as if they were the only one owed
by the partnership.
3. Right to Be Indemnified by the Fraudulent Partner:
○ What This Means: The honest partner can require the partner who committed
fraud or misrepresented themselves to reimburse them for all the partnership’s
debts and liabilities.
○ In Simple Terms: The dishonest partner must pay back the honest partner for
any debts or financial losses the partnership incurred due to their deceit.
ART. 1839. How the assets and liabilities of a partnership are handled after the partnership is
dissolved
When a Partnership Ends (Dissolution):
1. What Counts as Partnership Assets:
● Partnership Property: All the property and assets that belong to the partnership.
● Contributions by Partners: Any money or property that partners must add to pay off all
the partnership’s debts.
2. Order of Paying Off Debts:
● First: Debts to creditors who are not partners (e.g., banks, suppliers).
● Second: Debts to partners, but not related to their initial capital or profits (e.g., loans
made by partners to the partnership).
● Third: Repaying partners for their capital contributions (the money or property they
invested initially).
● Fourth: Paying out any remaining profits to the partners.
3. Using Assets to Pay Debts:
● The assets listed above are used in the order given to settle the partnership’s debts.
4. Partner Contributions for Remaining Debts:
● If the partnership’s assets aren’t enough to cover all debts, the partners must pitch in
additional money according to the rules in Article 1797 (generally based on their share
in the partnership).
5. Enforcement of Contributions:
● A court-appointed person (like an assignee for creditors) or any partner who paid
more than their share of debts can force other partners to contribute their fair share.
6. Rights of Partners Who Paid Extra:
● If a partner or their legal representative paid more than their share, they have the right
to get the other partners to pay them back for the excess.
7. Handling a Deceased Partner’s Property:
● The personal assets of a deceased partner can be used to cover the remaining
partnership debts, but only after paying off that partner’s personal debts.
8. Distribution of Property Under Court Supervision:
● If the partnership’s property and the partners’ individual properties are managed by a
court, the partnership’s creditors get first claim on the partnership’s assets, while the
partners’ personal creditors have first claim on their individual assets. However, secured
creditors (those with a lien) have their rights protected.
9. Order of Claims if a Partner is Insolvent:
● If a partner is insolvent, their personal assets are used to pay off debts in this order:
○ First: Personal creditors (people or entities the partner owes money to
personally).
○ Second: Partnership creditors (people or entities the partnership owes money
to).
○ Third: Other partners, for any contributions they made.
ART. 1840. Rights and liabilities of creditors when a partnership is dissolved, but the business
is continued by one or more of the former partners or new partners
When Creditors of a Dissolved Partnership Are Also Creditors of the Continuing Business:
1. New or Remaining Partners Continue the Business:
● New Partner or Some Partners Continue: If a new partner joins, or some partners
continue the business after a partner retires or dies without wrapping up the
partnership’s affairs (no liquidation), the creditors of the old partnership can still claim
against the new business.
● All But One Partner Retire: If all partners except one retire, and the remaining partner
continues the business alone or with others without liquidation, creditors of the
dissolved partnership can claim against the new business.
● Consent Without Assignment: If a partner retires or dies and the remaining partners
continue the business with the consent of the retiring or deceased partner's
representative, creditors can still claim against the business, even if the retiring or
deceased partner’s rights weren’t formally assigned.
● All Partners Sell to Third Parties: If all partners sell their rights to third parties who
promise to pay the partnership’s debts and continue the business, the creditors can
claim against these third parties.
● Wrongful Dissolution: If a partner wrongfully causes the dissolution and the remaining
partners continue the business, the creditors of the old partnership can claim against
the continuing business.
● Expulsion of a Partner: If a partner is expelled and the others continue the business, the
creditors can still claim against the business.
2. Liability of New Partners:
● Any third person who becomes a partner in the continuing business is liable to the
creditors of the old partnership, but only up to the assets of the new partnership, unless
there's an agreement that makes them personally liable.
3. Creditors’ Priority:
● Creditors of the dissolved partnership have a priority claim over the continuing
business’s assets, even before the personal creditors of a retiring or deceased partner
can claim anything.
4. Protection Against Fraud:
● Creditors can still challenge any transfer of partnership rights if it was done
fraudulently.
5. Use of Partnership Name:
● Just using the old partnership’s name, or the name of a deceased partner, in the new
business doesn’t make the personal assets of the deceased partner responsible for any
new debts of the continuing business.
ART. 1841. How a retiring or deceased partner (or their estate) gets compensated when the
partnership continues its business
Settlement of Accounts When a Partner Retires or Dies:
1. Value of Interest:
● When a partner retires or dies and the partnership continues under the conditions
described in Articles 1837 or 1840:
○ The value of the retiring or deceased partner’s interest in the dissolved
partnership needs to be determined as of the date of dissolution.
2. Payment Options:
● The retiring or deceased partner, or their estate, can choose to receive:
○ The Value of Their Interest: An amount equal to the value of their partnership
interest at the time of dissolution, plus interest.
○ Profits Instead of Interest: Alternatively, they can opt to receive the profits that
would have been made from their share in the partnership property instead of
interest.
3. Priority of Payment:
● Creditors of the dissolved partnership have priority over the separate creditors of the
retiring or deceased partner (or their estate) regarding any payments due under this
article. This means that before the retiring or deceased partner’s estate gets paid, the
dissolved partnership's creditors must be satisfied first.

ART. 1842. When a partner, or their legal representative, can claim an account of their
interest in the partnership
Right to Account:
● When Does the Right Accrue?
○ The right to an account of their interest arises for a partner (or their legal
representative) at the date of dissolution of the partnership.
● Who Can They Claim Against?
○ They can claim this account from:
■ Winding-up Partners: Those handling the dissolution process.
■ Surviving Partners: Remaining partners after dissolution.
■ Person or Partnership Continuing the Business: If the business
continues under new terms.
● In Absence of Agreement:
○ This right applies unless there is a different agreement between the partners
about how accounts should be settled.