Iowa Code 486A.702 – Dissociated partner’s power to bind and liability to partnership
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1. For two 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, is bound by an act of the dissociated partner which would have bound the partnership under section 486A.301 before dissociation only if at the time of entering into the transaction all of the following apply:
a. The other party reasonably believed that the dissociated partner was then a partner.
b. The other party did not have notice of the partner’s dissociation.
c. The other party is not deemed to have had knowledge under section 486A.303, subsection 5, or notice under section 486A.704, subsection 3.
Terms Used In Iowa Code 486A.702
- Business: includes every trade, occupation, and profession. See Iowa Code 486A.101
- following: when used by way of reference to a chapter or other part of a statute mean the next preceding or next following chapter or other part. See Iowa Code 4.1
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
- Partnership: means an association of two or more persons to carry on as co-owners a business for profit formed under section 486A. See Iowa Code 486A.101
2. 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 1.