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other and to partnership
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3178.0401 Partner's rights and duties.
(1) Each partner is entitled to an
4equal share of the partnership distributions and, except in the case of a limited
5liability partnership, is chargeable with a share of the partnership losses in
6proportion to the partner's share of the distributions.
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7(2) A partnership shall reimburse a partner for any payment made by the
8partner in the course of the partner's activities on behalf of the partnership, if the
9partner complied with this section and s. 178.0409 in making the payment.
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10(3) A partnership shall indemnify and hold harmless a person with respect to
11any claim or demand against the person and any debt, obligation, or other liability
12incurred by the person by reason of the person's former or present capacity as a
13partner, if the claim, demand, debt, obligation, or other liability does not arise from
14the person's breach of this section or s. 178.0407 or 178.0409.
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15(4) In the ordinary course of its business, a partnership may advance
16reasonable expenses, including attorney fees and costs, incurred by a person in
17connection with a claim or demand against the person by reason of the person's
18former or present capacity as a partner, if the person promises to repay the
19partnership if the person ultimately is determined not to be entitled to be
20indemnified under sub. (3).
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21(5) A partnership may purchase and maintain insurance on behalf of a partner
22against liability asserted against or incurred by the partner in that capacity or
23arising from that status even if, under s. 178.0105 (3) (g), the partnership agreement
24could not eliminate or limit the person's liability to the partnership for the conduct
25giving rise to the liability.
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1(6) A partnership shall reimburse a partner for an advance to the partnership
2beyond the amount of capital the partner agreed to contribute.
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3(7) A payment or advance made by a partner which gives rise to a partnership
4obligation under sub. (2) or (6) constitutes a loan to the partnership which accrues
5interest from the date of the payment or advance.
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6(8) Each partner has equal rights in the management and conduct of the
7partnership's business.
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8(9) A partner may use or possess partnership property only on behalf of the
9partnership.
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10(10) Unless authorized by the partnership agreement or otherwise in
11accordance with this chapter, a partner is not entitled to remuneration for services
12performed for the partnership, except for reasonable compensation for services
13rendered in winding up the business of the partnership.
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14(11) A difference arising as to a matter in the ordinary course of business of a
15partnership may be decided by a majority of the partners. An act outside the
16ordinary course of business of a partnership, an amendment to the partnership
17agreement, or a merger, interest exchange, conversion, or domestication by the
18partnership under subch. IX may be undertaken only with the affirmative vote or
19consent of all the partners.
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20178.0402 Becoming partner. (1) Upon formation of a partnership, a person
21becomes a partner under s. 178.0202 (1).
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22(2) After formation of a partnership, a person becomes a partner in any of the
23following ways:
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(a) As provided in the partnership agreement.
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(b) As a result of a transaction effective under subch. XI.
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1(c) With the affirmative vote or consent of all the partners.
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2(3) A person may become a partner without doing any of the following:
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(a) Acquiring a transferable interest.
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(b) Making or being obligated to make a contribution to the partnership.
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5178.0403 Form of contribution. A contribution may consist of money or
6other property transferred to, services performed for, or another benefit provided to
7the partnership or an agreement to transfer money or property to, perform services
8for, or provide another benefit to the partnership.
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9178.0404 Liability for contribution.
(1) A person's obligation to make a
10contribution to a partnership is not excused by the person's death, disability,
11termination, or other inability to perform personally.
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12(2) If a person does not fulfill an obligation to make a contribution other than
13money, the person is obligated at the option of the partnership to contribute money
14equal to the value of the part of the contribution which has not been made.
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15(3) The obligation of a person to make a contribution may be compromised only
16by the affirmative vote or consent of all the partners. If a creditor of a limited liability
17partnership extends credit or otherwise acts in reliance on an obligation described
18in sub. (1) without knowledge or notice of a compromise under this subsection, the
19creditor may enforce the obligation.
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20178.0405 Sharing of and right to distributions before dissolution. (1) 21Any distribution made by a partnership before its dissolution and winding up must
22be in equal shares among partners, except to the extent necessary to comply with a
23transfer effective under s. 178.0503 or charging order in effect under s. 178.0504.
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1(2) Subject to s. 178.0701, a person has a right to a distribution before the
2dissolution and winding up of a partnership only if the partnership decides to make
3an interim distribution.
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4(3) A person does not have a right to demand or receive a distribution from a
5partnership in any form other than money. Except as otherwise provided in s.
6178.0806, a partnership may distribute an asset in kind only if each part of the asset
7is fungible with each other part and each person receives a percentage of the asset
8equal in value to the person's share of distributions.
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9(4) If a partner or transferee becomes entitled to receive a distribution, the
10partner or transferee has the status of, and is entitled to all remedies available to,
11a creditor of the partnership with respect to the distribution. However, the
12partnership's obligation to make a distribution is subject to offset for any amount
13owed to the partnership by the partner or a person dissociated as partner on whose
14account the distribution is made.
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15178.0406 Limitations on distributions by limited liability partnership. 16(1) A limited liability partnership may not make a distribution, including a
17distribution under s. 178.0806, if after the distribution any of the following applies:
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(a) The partnership would not be able to pay its debts as they become due in
19the ordinary course of the partnership's business.
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(b) The partnership's total assets would be less than the sum of its total
21liabilities plus the amount that would be needed, if the partnership were to be
22dissolved and wound up at the time of the distribution, to satisfy the preferential
23rights upon dissolution and winding up of partners and transferees whose
24preferential rights are superior to the rights of persons receiving the distribution.
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1(2) A limited liability partnership may base a determination that a distribution
2is not prohibited under sub. (1) on any of the following:
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(a) Financial statements prepared on the basis of accounting practices and
4principles that are reasonable in the circumstances.
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(b) A fair valuation or other method that is reasonable under the
6circumstances.
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7(3) Except as otherwise provided in sub. (5), the effect of a distribution under
8sub. (1) is measured as follows:
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(a) In the case of a distribution described in s. 178.0102 (4) (a) 1. and 2., as of
10the earlier of the following:
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1. The date money or other property is transferred or debt is incurred by the
12limited liability partnership.
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2. The date the person entitled to the distribution ceases to own the interest
14or rights being acquired by the partnership in return for the distribution.
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(b) In the case of any distribution of indebtedness other than one under par. (a),
16as of the date the indebtedness is distributed.
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(c) In all cases other than those under par. (a) or (b), as of the following:
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1. The date the distribution is authorized, if the payment occurs not later than
19120 days after that date.
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2. The date the payment is made, if the payment occurs more than 120 days
21after the distribution is authorized.
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22(4) A limited liability partnership's indebtedness to a partner or transferee
23incurred by reason of a distribution made in accordance with this section is at parity
24with the partnership's indebtedness to its general, unsecured creditors, except to the
25extent subordinated by agreement.
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1(5) A limited liability partnership's indebtedness, including indebtedness
2issued as a distribution, is not a liability for purposes of sub. (1) if the terms of the
3indebtedness provide that payment of principal and interest is made only if and to
4the extent that a payment of a distribution could then be made under this section.
5If the indebtedness is issued as a distribution, each payment of principal or interest
6is treated as a distribution, the effect of which is measured on the date the payment
7is made.
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8(6) In measuring the effect of a distribution under s. 178.0806, the liabilities
9of a dissolved limited liability partnership do not include any claim that has been
10disposed of under s. 178.0807, 178.0808, or 178.0809.
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11178.0407 Liability for improper distributions by limited liability
12partnership. (1) Except as otherwise provided in sub. (2), if a partner of a limited
13liability partnership consents to a distribution made in violation of s. 178.0406 and
14in consenting to the distribution fails to comply with s. 178.0409, the partner is
15personally liable to the partnership for the amount of the distribution which exceeds
16the amount that could have been distributed without the violation of s. 178.0406.
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17(2) To the extent the partnership agreement of a limited liability partnership
18expressly relieves a partner of the authority and responsibility to consent to
19distributions and imposes that authority and responsibility on one or more other
20partners, the liability stated in sub. (1) applies to the other partners and not to the
21partner that the partnership agreement relieves of the authority and responsibility.
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22(3) A person that receives a distribution knowing that the distribution violated
23s. 178.0406 is personally liable to the limited liability partnership but only to the
24extent that the distribution received by the person exceeded the amount that could
25have been properly paid under s. 178.0406.
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1(4) A person against which an action is commenced because the person is liable
2under sub. (1) may do any of the following:
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(a) Implead any other person that is liable under sub. (1) and seek to enforce
4a right of contribution from the person.
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(b) Implead any person that received a distribution in violation of sub. (3) and
6seek to enforce a right of contribution from the person in the amount the person
7received in violation of sub. (3).
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8(5) An action under this section is barred unless commenced not later than 2
9years after the distribution.
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10178.0408 Rights to information of partners and persons dissociated as
11partner. (1) A partnership shall keep its books and records, if any, at its principal
12office.
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13(2) On reasonable notice, a partner may inspect and copy during regular
14business hours, at a reasonable location specified by the partnership, any record
15maintained by the partnership regarding the partnership's business, financial
16condition, and other circumstances, to the extent the information is material to the
17partner's rights and duties under the partnership agreement or this chapter.
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18(3) The partnership shall furnish to each partner all of the following:
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(a) Without demand, any information concerning the partnership's business,
20financial condition, and other circumstances which the partnership knows and is
21material to the proper exercise of the partner's rights and duties under the
22partnership agreement or this chapter, except to the extent the partnership can
23establish that it reasonably believes the partner already knows the information.
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(b) On demand, any other information concerning the partnership's business,
25financial condition, and other circumstances, except to the extent the demand or the
1information demanded is unreasonable or otherwise improper under the
2circumstances.
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3(4) The duty to furnish information under sub. (3) also applies to each partner
4on whom a demand is made to the extent the partner knows any of the information
5described in sub. (3).
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6(5) Subject to sub. (10), on 10 days' demand made in a record received by a
7partnership, a person dissociated as a partner may have access to information to
8which the person was entitled while a partner if all of the following apply:
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(a) The information pertains to the period during which the person was a
10partner.
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(b) The person seeks the information in good faith.
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(c) The person satisfies the requirements imposed on a partner by sub. (2).
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13(6) Not later than 10 days after receiving a demand under sub. (5), the
14partnership in a record shall inform the person that made the demand of all of the
15following:
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(a) The information that the partnership will provide in response to the
17demand and when and where the partnership will provide the information.
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(b) The partnership's reasons for declining, if the partnership declines to
19provide any demanded information.
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20(7) A partnership may charge a person that makes a demand under this section
21the reasonable costs of copying, limited to the costs of labor and material.
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22(8) A partner or person dissociated as a partner may exercise the rights under
23this section through an agent or, in the case of an individual under legal disability,
24a legal representative. Any restriction or condition imposed by the partnership
1agreement or under sub. (10) applies both to the agent or legal representative and
2to the partner or person dissociated as a partner.
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3(9) Subject to s. 178.0505, the rights under this section do not extend to a person
4as transferee.
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5(10) In addition to any restriction or condition stated in its partnership
6agreement, a partnership, as a matter within the ordinary course of its business, may
7impose reasonable restrictions and conditions on access to and use of information to
8be furnished under this section, including designating information confidential and
9imposing nondisclosure and safeguarding obligations on the recipient. In a dispute
10concerning the reasonableness of a restriction under this subsection, the partnership
11has the burden of proving reasonableness.
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12178.0409 Standards of conduct for partners. (1) A partner owes to the
13partnership and the other partners the duties of loyalty and care stated in subs. (2)
14and (3).
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15(2) The fiduciary duty of loyalty of a partner includes all of the following duties:
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(a) The duty to account to the partnership and hold as trustee for it any
17property, profit, or benefit derived by the partner in or from any of the following:
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1. The conduct or winding up of the partnership's business.
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2. A use by the partner of the partnership's property.
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3. The appropriation of a partnership opportunity.
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(b) The duty to refrain from dealing with the partnership in the conduct or
22winding up of the partnership business as or on behalf of a person having an interest
23adverse to the partnership.
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(c) The duty to refrain from competing with the partnership in the conduct of
25the partnership's business before the dissolution of the partnership.
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1(3) The duty of care of a partner in the conduct or winding up of the partnership
2business is to refrain from engaging in conduct for which relief or exoneration from
3liability is not permitted under s. 178.0105 (3) (h).
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4(4) A partner shall discharge the duties and obligations under this chapter or
5under the partnership agreement and exercise any rights thereunder consistently
6with the contractual obligation of good faith and fair dealing.
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7(5) A partner does not violate a duty or obligation under this chapter or under
8the partnership agreement solely because the partner's conduct furthers the
9partner's own interest.
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10(6) All the partners, or one or more disinterested partners with authority to act
11in the matter, may authorize or ratify, after full disclosure of all material facts, a
12specific act or transaction by a partner that otherwise would violate the duty of
13loyalty.
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14(7) It is a defense to a claim under sub. (2) (b) and any comparable claim in
15equity or at common law that the transaction was fair to the partnership.
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16(8) If, as permitted by sub. (6) or the partnership agreement, a partner enters
17into a transaction with the partnership which otherwise would be prohibited by sub.
18(2) (b), the partner's rights and obligations arising from the transaction are the same
19as those of a person that is not a partner.
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20178.0410 Actions by partnership and partners. (1) A partnership may
21maintain an action against a partner for a breach of the partnership agreement, or
22for the violation of a duty to the partnership, causing harm to the partnership.
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23(2) A partner may maintain an action against the partnership or another
24partner, with or without an accounting as to partnership business, to enforce the
25partner's rights and protect the partner's interests, including rights and interests
1under the partnership agreement or this chapter or arising independently of the
2partnership relationship.
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3(3) A right to an accounting on dissolution and winding up does not revive a
4claim barred by law.
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5178.0411 Continuation of partnership beyond definite term or
6particular undertaking. (1) If a partnership for a definite term or particular
7undertaking is continued, without an express agreement, after the expiration of the
8term or completion of the undertaking, the rights and duties of the partners remain
9the same as they were at the expiration or completion, so far as is consistent with a
10partnership at will.
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11(2) If the partners, or those of them who habitually acted in the business during
12the term or undertaking, continue the business without any settlement or
13liquidation of the partnership, they are presumed to have agreed that the
14partnership will continue.
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subchapter V