2023 Illinois Compiled Statutes › Chapter 805 - BUSINESS ORGANIZATIONS › 805 ILCS 206/ - Uniform Partnership Act (1997). › Article 7 - Partner's Dissociation When Business Not Wound Up

(805 ILCS 206/Art. 7 heading)
ARTICLE 7
PARTNER'S DISSOCIATION WHEN BUSINESS NOT WOUND UP
(805 ILCS 206/701)
Sec. 701. 
		Purchase of dissociated partner's interest.
(a) If a partner is dissociated from a partnership without resulting in a
dissolution and winding
up of the partnership business under Section 801 of this Act, the partnership
shall cause the
dissociated partner's interest in the partnership to be purchased for a buyout
price determined
pursuant to subsection (b) of this Section.
(b) The buyout price of a dissociated partner's interest is the amount that
would have been
distributable to the dissociating partner under Section 807(b) if, on the date
of dissociation, the
assets of the partnership were sold at a price equal to the greater of the
liquidation value or the
value based on a sale of the entire business as a going concern without the
dissociated partner
and the partnership were wound up as of that date. Interest must be paid from
the date of
dissociation to the date of payment.
(c) Damages for wrongful dissociation under Section 602(b), and all other
amounts owing,
whether or not presently due, from the dissociated partner to the partnership,
must be offset
against the buyout price. Interest must be paid from the date the amount owed
becomes due to
the date of payment.
(d) A partnership shall indemnify a dissociated partner whose interest is being purchased
against all partnership liabilities, whether incurred before or after the dissociation, except
liabilities incurred by an act of the dissociated partner under Section 702.
(e) If no agreement for the purchase of a dissociated partner's interest is
reached within 120
days after a written demand for payment, the partnership shall pay, or cause to
be paid, in cash to
the dissociated partner the amount the partnership estimates to be the buyout
price and accrued
interest, reduced by any offsets and accrued interest under subsection (c).
(f) If a deferred payment is authorized under subsection (h), the
partnership may tender a
written offer to pay the amount it estimates to be the buyout price and accrued
interest, reduced
by any offsets under subsection (c), stating the time of payment, the amount
and type of security
for payment, and the other terms and conditions of the obligation.
(g) The payment or tender required by subsection (e) or (f) must be
accompanied by the
following:
(1) a statement of partnership assets and liabilities     as of the date of dissociation;
(2) the latest available partnership balance sheet     and income statement, if any;
(3) an explanation of how the estimated amount of the     payment was calculated; and
(4) written notice that the payment is in full     satisfaction of the obligation to purchase unless, within 120 days after the written notice, the dissociated partner commences an action to determine the buyout price, any offsets under subsection (c), or other terms of the obligation to purchase.
(h) A partner who wrongfully dissociates before the expiration of a definite term or the
completion of a particular undertaking is not entitled to payment of any portion of the buyout
price until the expiration of the term or completion of the undertaking, unless the partner
establishes to the satisfaction of the court that earlier payment will not cause undue hardship to
the business of the partnership. A deferred payment must be adequately secured and bear
interest.
(i) A dissociated partner may maintain an action against the partnership, pursuant to Section
405(b)(2)(ii), to determine the buyout price of that partner's interest, any
offsets under subsection
(c), or other terms of the obligation to purchase. The action must be
commenced within 120 days
after the partnership has tendered payment or an offer to pay or within one
year after written
demand for payment if no payment or offer to pay is tendered. The court shall
determine the
buyout price of the dissociated partner's interest, any offset due under
subsection (c) of this
Section, and accrued interest, and enter judgment for any additional payment or
refund. If
deferred payment is authorized under subsection (h), the court shall also
determine the security
for payment and other terms of the obligation to purchase. The court may
assess reasonable
attorney's fees and the fees and expenses of appraisers or other experts for a
party to the action,
in amounts the court finds equitable, against a party that the court finds
acted arbitrarily,
vexatiously, or not in good faith. The finding may be based on the
partnership's failure to tender
payment or an offer to pay or to comply with subsection (g).
(Source: P.A. 92-740, eff. 1-1-03.)
(805 ILCS 206/702)
Sec. 702. 
		
		Dissociated partner's power
to bind and liability to partnership.
(a) For 2 years after a partner dissociates without resulting in a
dissolution and winding up
of the partnership business, the partnership, including a surviving partnership
under Article 9 of
this Act, is bound by an act of the dissociated partner which would have bound
the partnership
under Section 301 before dissociation only if at the time of entering into the
transaction the other
party:
(1) reasonably believed that the dissociated partner     was then a partner;
(2) did not have notice of the partner's     dissociation; and
(3) is not deemed to have had knowledge under Section     303(e) or notice under Section 704(c).
(b) A dissociated partner is liable to the partnership for any damage caused
to the partnership
arising from an obligation incurred by the dissociated partner after
dissociation for which the
partnership is liable under subsection (a) of this Section.
(Source: P.A. 92-740, eff. 1-1-03.)
(805 ILCS 206/703)
Sec. 703. 
		
		Dissociated partner's liability
to other persons.
(a) A partner's dissociation does not of itself discharge the partner's
liability for a partnership
obligation incurred before dissociation. A dissociated partner is not liable
for a partnership
obligation incurred after dissociation, except as otherwise provided in
subsection (b) of this
Section.
(b) A partner who dissociates without resulting in a dissolution and winding
up of the
partnership business is liable as a partner to the other party in a transaction
entered into by the
partnership, or a surviving partnership under Article 9 of this Act, within 2
years after the
partner's dissociation, only if the partner is liable for the obligation under
Section 306 and at the
time of entering into the transaction the other party:
(1) reasonably believed that the dissociated partner     was then a partner;
(2) did not have notice of the partner's     dissociation; and
(3) is not deemed to have had knowledge under Section     303(e) or notice under Section 704(c).
(c) By agreement with the partnership creditor and the partners continuing
the business, a
dissociated partner may be released from liability for a partnership
obligation.
(d) A dissociated partner is released from liability for a partnership
obligation if a partnership
creditor, with notice of the partner's dissociation but without the partner's
consent, agrees to a
material alteration in the nature or time of payment of a partnership
obligation.
(Source: P.A. 92-740, eff. 1-1-03.)
(805 ILCS 206/704)
Sec. 704. 
		Statement of dissociation.
(a) A dissociated partner or the partnership may file a statement of
dissociation stating the
name of the partnership and that the partner is dissociated from the
partnership.
(b) A statement of dissociation is a limitation on the authority of a
dissociated partner for the
purposes of Section 303(d) and (e).
(c) For the purposes of Sections 702(a)(3) and 703(b)(3) of this Act, a
person not a partner is
deemed to have notice of the dissociation 90 days after the statement of
dissociation is filed.
(Source: P.A. 92-740, eff. 1-1-03.)
(805 ILCS 206/705)
Sec. 705. 
		Continued use of partnership name. 
		Continued use of a partnership name, or a dissociated partner's name as
part thereof, by
partners continuing the business does not of itself make the dissociated
partner liable for an
obligation of the partners or the partnership continuing the business.
(Source: P.A. 92-740, eff. 1-1-03.)