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18178.0601 Events causing dissociation. A person is dissociated as a partner
19when any of the following applies:
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20(1) The partnership knows or has notice of the person's express will to
21withdraw as a partner, but, if the person has specified a withdrawal date later than
22the date the partnership knew or had notice, on that later date.
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23(2) An event stated in the partnership agreement as causing the person's
24dissociation occurs.
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25(3) The person is expelled as a partner pursuant to the partnership agreement.
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1(4) The person is expelled as a partner by the affirmative vote or consent of all
2the other partners if any of the following applies:
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(a) It is unlawful to carry on the partnership business with the person as a
4partner.
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(b) There has been a transfer of all of the person's transferable interest in the
6partnership, other than a transfer for security purposes or the entry of a charging
7order that is in effect under s. 178.0504 and that has not been foreclosed.
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(c) The person is an entity and all of the following apply:
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1. The partnership notifies the person that it will be expelled as a partner
10because the person has filed a statement of dissolution or the equivalent, the person
11has been administratively dissolved, the person's charter or the equivalent has been
12revoked, or the person's right to conduct business has been suspended by the
13jurisdiction of the person's governing law.
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2. The statement of dissolution or the equivalent has not been withdrawn,
15rescinded, or revoked, or the person's charter or the equivalent or right to conduct
16business has not been reinstated, within 90 days after the notification under subd.
171.
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(d) The person is an unincorporated entity that has been dissolved and whose
19activities and affairs are being wound up.
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20(5) On application by the partnership or another partner, the person is expelled
21as a partner by judicial order because the person has done any of the following:
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(a) Engaged, or is engaging, in wrongful conduct that has affected adversely
23and materially, or will affect adversely and materially, the partnership's business.
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1(b) Committed willfully or persistently, or is committing willfully or
2persistently, a material breach of the partnership agreement or a duty or obligation
3under s. 178.0409.
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(c) Engaged, or is engaging, in conduct relating to the partnership's business
5which makes it not reasonably practicable to carry on the business with the person
6as a partner.
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7(6) Any of the following applies to the person:
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(a) The person becomes a debtor in bankruptcy.
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(b) The person signs an assignment for the benefit of creditors.
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(c) The person seeks, consents to, or acquiesces in the appointment of a trustee,
11receiver, or liquidator of the person or of all or substantially all the person's property.
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12(7) In the case of an individual, any of the following applies to the individual:
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(a) The individual dies.
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(b) A guardian or general conservator for the individual is appointed.
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(c) A court orders that the individual has otherwise become incapable of
16performing the individual's duties as a partner under this chapter or the partnership
17agreement.
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18(8) In the case of a person that is a testamentary or living trust or is acting as
19a partner by virtue of being a trustee of such a trust, the trust's entire transferable
20interest in the partnership is distributed.
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21(9) In the case of a person that is an estate or is acting as a partner by virtue
22of being a personal representative of an estate, the estate's entire transferable
23interest in the partnership is distributed.
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24(10) In the case of a person that is not an individual, the existence of the person
25terminates.
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1(15) The partnership dissolves and completes winding up.
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2178.0602 Power to dissociate as partner; wrongful dissociation. (1) A
3person has the power to dissociate as a partner at any time, rightfully or wrongfully,
4by withdrawing as a partner by express will under s. 178.0601 (1).
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5(2) A person's dissociation as a partner is wrongful only if any of the following
6applies:
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(a) The dissociation is in breach of an express provision of the partnership
8agreement.
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(b) In the case of a partnership for a definite term or particular undertaking,
10the dissociation occurs before the expiration of the term or the completion of the
11undertaking and any of the following applies:
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1. The person withdraws as a partner by express will, unless the withdrawal
13follows not later than 90 days after another person's dissociation by death or
14otherwise under s. 178.0601 (6) to (10) or wrongful dissociation under this
15subsection.
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2. The person is expelled as a partner by judicial order under s. 178.0601 (5).
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3. The person is dissociated under s. 178.0601 (6).
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4. In the case of a person that is not a trust other than a business trust, an
19estate, or an individual, the person is expelled or otherwise dissociated because it
20willfully dissolved or terminated.
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21(3) A person that wrongfully dissociates as a partner is liable to the partnership
22and to the other partners for damages caused by the dissociation. The liability is in
23addition to any debt, obligation, or other liability of the partner to the partnership
24or the other partners.
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1178.0603 Effect of dissociation. (1) If a person's dissociation results in a
2dissolution and winding up of the partnership business, subch. VIII applies;
3otherwise, subch. VII applies.
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4(2) If a person is dissociated as a partner, all of the following apply:
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(a) The person's right to participate in the management and conduct of the
6partnership's business terminates, except as otherwise provided in s. 178.0802 (3).
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(b) The person's duties and obligations under s. 178.0409 end with regard to
8matters arising and events occurring after the person's dissociation, except to the
9extent the partner participates in winding up the partnership's business pursuant
10to s. 178.0802.
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11(3) A person's dissociation does not of itself discharge the person from any debt,
12obligation, or other liability to the partnership or the other partners which the person
13incurred while a partner.
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subchapter vii
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PERSON'S dissociation AS
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A PARTNER when business
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not wound up
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18178.0701 Purchase of interest of person dissociated as partner. (1) If
19a person is dissociated as a partner without the dissociation resulting in a dissolution
20and winding up of the partnership business under s. 178.0801, the partnership shall
21cause the person's interest in the partnership to be purchased for a buyout price
22determined pursuant to sub. (2).
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23(2) The buyout price of the interest of a person dissociated as a partner is the
24amount that would have been distributable to the person under s. 178.0806 (2) if, on
25the date of dissociation, the assets of the partnership were sold and the partnership
1were wound up, with the sale price equal to the greater of the liquidation value or
2the value based on a sale of the entire business as a going concern without the person.
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3(3) Interest accrues on the buyout price from the date of dissociation to the date
4of payment, but damages for wrongful dissociation under s. 178.0602 (2), and, at the
5option of the partnership, some or all other amounts owing, whether or not presently
6due, from the person dissociated as a partner to the partnership, must be offset
7against the buyout price.
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8(4) A partnership shall defend, indemnify, and hold harmless a person
9dissociated as a partner whose interest is being purchased against all partnership
10liabilities, whether incurred before or after the dissociation, except liabilities
11incurred by an act of the person under s. 178.0702.
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12(5) If no agreement for the purchase of the interest of a person dissociated as
13a partner is reached within 120 days after a written demand for payment, the
14partnership shall pay, or cause to be paid, in money to the person the amount the
15partnership estimates to be the buyout price and accrued interest, reduced by any
16offsets and accrued interest under sub. (3).
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17(6) If a deferred payment is authorized under sub. (8), the partnership may
18tender a written offer to pay the amount it estimates to be the buyout price and
19accrued interest, reduced by any offsets under sub. (3), stating the time of payment,
20the amount and type of security for payment, and the other terms and conditions of
21the obligation.
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22(7) The payment or tender required by sub. (5) or (6) must be accompanied by
23the following:
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(a) A statement of partnership assets and liabilities as of the date of
25dissociation.
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1(b) The latest available partnership balance sheet and income statement, if
2any.
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(c) An explanation of how the estimated amount of the payment was calculated.
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(d) Written notice that the payment is in full satisfaction of the obligation to
5purchase unless, not later than 120 days after the written notice, the person
6dissociated as a partner commences an action to determine the buyout price, any
7offsets under sub. (3), or other terms of the obligation to purchase.
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8(8) A person that wrongfully dissociates as a partner before the expiration of
9a definite term or the completion of a particular undertaking is not entitled to
10payment of any part of the buyout price until the expiration of the term or completion
11of the undertaking, unless the person establishes to the satisfaction of the court that
12earlier payment will not cause undue hardship to the business of the partnership.
13A deferred payment must be adequately secured and bear interest.
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14(9) A person dissociated as a partner may maintain an action against the
15partnership, pursuant to s. 178.0410 (2), to determine the buyout price of that
16person's interest, any offsets under sub. (3), or other terms of the obligation to
17purchase. The action must be commenced not later than 120 days after the
18partnership has tendered payment or an offer to pay in accordance with subs. (5) to
19(8) to the extent applicable or within one year after written demand for payment if
20no payment or offer to pay is tendered. The court shall determine the buyout price
21of the person's interest, any offset due under sub. (3), and accrued interest, and enter
22judgment for any additional payment or refund. If deferred payment is authorized
23under sub. (8), the court shall also determine the security for payment and other
24terms of the obligation to purchase. The court may assess reasonable attorney fees
25and the fees and expenses of appraisers or other experts for a party to the action, in
1amounts the court finds equitable, against a party that the court finds acted
2arbitrarily, vexatiously, or not in good faith. The finding may be based on the
3partnership's failure to tender payment or an offer to pay or to comply with sub. (7).
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4178.0702 Power to bind and liability of person dissociated as partner. 5(1) After a person is dissociated as a partner without the dissociation resulting in
6a dissolution and winding up of the partnership business and before the partnership
7is merged out of existence or converted under subch. XI, or dissolved, the partnership
8is bound by an act of the person with respect to a transaction with another party only
9if all of the following apply:
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(a) The act would have bound the partnership under s. 178.0301 before
11dissociation.
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(b) At the time the other party enters into the transaction, less than 2 years has
13passed since the dissociation.
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(c) At the time the other party enters into the transaction, the other party does
15not know or have notice of the dissociation and reasonably believes that the person
16is a partner.
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17(2) If a partnership is bound under sub. (1), the person dissociated as a partner
18which caused the partnership to be bound is liable to all of the following:
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(a) The partnership, for any damage caused to the partnership arising from the
20obligation incurred under sub. (1).
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(b) If a partner or another person dissociated as a partner is liable for the
22obligation, the partner or other person, for any damage caused to the partner or other
23person arising from the liability.
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1178.0703 Liability of person dissociated as partner to other persons. 2(1) Except as otherwise provided in sub. (2) or s. 178.0308 (1), a person dissociated
3as a partner is not liable for a partnership obligation incurred after dissociation.
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4(2) A person that is dissociated as a partner is liable to a party on a transaction
5entered into by the partnership after the dissociation only if all of the following apply:
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(a) The person would have been liable on the transaction had the person not
7been dissociated.
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(b) At the time the other party enters into the transaction, less than 2 years has
9passed since the dissociation.
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(c) At the time the other party enters into the transaction, the other party does
11not have knowledge or notice of the dissociation and reasonably believes that the
12person is a partner.
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13(3) By agreement with a creditor of a partnership and the partnership, a person
14dissociated as a partner may be released from liability for a debt, obligation, or other
15liability of the partnership.
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16(4) A person dissociated as a partner is released from liability for a debt,
17obligation, or other liability of the partnership if the partnership's creditor, with
18knowledge or notice of the person's dissociation but without the person's consent,
19agrees to a material alteration in the nature or time of payment of the debt,
20obligation, or other liability.
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21178.0704 Statement of dissociation.
(1) A person dissociated as a partner
22or the partnership may deliver to the department for filing a statement of
23dissociation stating the name of the partnership and that the person has dissociated
24from the partnership.
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1(2) A statement of dissociation is a limitation on the authority of a person
2dissociated as a partner for the purposes of s. 178.0303.
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3178.0705 Continued use of partnership name. Continued use of a
4partnership name, or the name of a person dissociated as a partner as part of the
5partnership name, by partners continuing the business does not of itself make the
6person dissociated as a partner liable for an obligation of the partners or the
7partnership continuing the business.
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subchapter viii
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DISSOLUTION AND winding up
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10178.0801 Events causing dissolution. A partnership is dissolved, and its
11business must be wound up, upon the occurrence of any of the following:
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12(1) In a partnership at will, any of the following:
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(a) The partnership knows or has notice of a person's express will to withdraw
14as a partner, other than a partner that has dissociated under s. 178.0601 (2) to (10),
15but, if the person has specified a withdrawal date later than the date the partnership
16knew or had notice, on the later date.
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(b) The affirmative vote or consent of all the partners to wind up the
18partnership business.
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19(2) In a partnership for a definite term or particular undertaking, any of the
20following:
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(a) Within 90 days after a person's dissociation by death or otherwise under s.
22178.0601 (6) to (10) or wrongful dissociation under s. 178.0602 (2), the affirmative
23vote or consent of at least half of the remaining partners to wind up the partnership
24business, for which purpose a person's rightful dissociation pursuant to s. 178.0602
25(2) (b) 1. constitutes that partner's consent to wind up the partnership business.
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1(b) The affirmative vote or consent of all the partners to wind up the
2partnership business.
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(c) The expiration of the term or the completion of the undertaking.
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4(3) An event or circumstance that the partnership agreement states causes
5dissolution.
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6(4) On application by a partner, the entry by the circuit court of an order
7dissolving the partnership on any of the following grounds:
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(a) That the conduct of all or substantially all the partnership's business is
9unlawful.
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(b) That the economic purpose of the partnership is likely to be unreasonably
11frustrated.