Kentucky Statutes 362.1-103 – Effect of partnership agreement — Nonwaivable provisions
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(1) Except as otherwise provided in subsection (2) of this section, relations among the partners and between the partners and the partnership are governed by the partnership agreement. To the extent the partnership agreement does not otherwise provide, this subchapter governs relations among the partners and between the partners and the partnership.
(2) The partnership agreement shall not:
(a) Vary the rights and duties under KRS § 362.1-105 except to eliminate the duty to provide copies of statements to all of the partners;
(b) Unreasonably restrict the right of access to books and records under KRS
362.1-403(2) or unreasonably restrict the right to information KRS § 362.1-
403(3);
(c) Eliminate the duty of loyalty under KRS § 362.1-404(2) or 362.1-603(2)(c), but:
1. The partnership agreement may identify specific types or categories of activities that do not violate the duty of loyalty, if not manifestly unreasonable; or
2. All of the partners or a number or percentage specified in the partnership agreement may authorize or ratify, after full disclosure of all material facts, a specific act or transaction that otherwise would violate the duty of loyalty;
(d) Unreasonably reduce the duty of care under KRS § 362.1-404(3) or 362.1-
603(2)(c);
(e) Eliminate the obligation of good faith and fair dealing under KRS § 362.1-404, but the partnership agreement may prescribe the standards by which the performance of the obligation is to be measured, if the standards are not manifestly unreasonable;
(f) Vary the power to dissociate as a partner under KRS § 362.1-602(1), except to require the notice under KRS § 362.1-601(1) to be in writing;
(g) Vary the right of a partner or the partnership to seek a partner’s expulsion by judicial determination or vary the right of a court to expel a partner in the events specified in KRS § 362.1-601(5);
(h) Vary the requirement to wind up the partnership business in cases specified in
KRS § 362.1-801(4), (5), or (6); or
(i) Vary the law applicable to a limited liability partnership under KRS § 362.1-
106(2); or
(j) Vary the liabilities and remedies under KRS § 362.1-405 to a greater extent than variations are in fact made under this section in the substantive rights in the partnership agreement giving rise to the partner claims at issue.
(3) If a written partnership agreement contains a provision to the effect that any amendment to the partnership agreement must be in writing and adopted in accordance with the provisions of the partnership agreement, that provision shall be enforceable in accordance with its terms, and any agreement among the partners
concerning the partnership which is not in writing and adopted in accordance with the provisions of the partnership agreement shall not be part of the partnership agreement.
(4) A partnership agreement may provide that the interest of any partner who fails to make any contribution that the partner is obligated to make or who otherwise violates an obligation undertaken in the partnership agreement shall be subject to specified penalties for, or specified consequences of, such failure. Such penalty or consequence may take the form of reducing or eliminating the defaulting partner’s proportionate interest in the partnership, subordinating the partner’s interest to that of nondefaulting partners, a forced sale of that interest, forfeiture of his or her interest, the lending by other partners of the amount necessary to meet the defaulting partner’s commitment, a fixing of the value of his or her interest by appraisal or by formula and redemption or sale of the interest in the partnership at such value, or other penalty or consequence.
(5) A partnership agreement may provide rights to any person, including a person who is not a partner or not otherwise a party to the partnership agreement, to the extent set forth therein.
(6) No partner or other person shall have a vested property right resulting from any provision of a partnership agreement which may not be modified by its amendment or as otherwise permitted by law.
Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 133, sec. 51, effective July 15, 2010. — Created
2006 Ky. Acts ch. 149, sec. 3, effective July 12, 2006.
(2) The partnership agreement shall not:
Terms Used In Kentucky Statutes 362.1-103
- Amendment: A proposal to alter the text of a pending bill or other measure by striking out some of it, by inserting new language, or both. Before an amendment becomes part of the measure, thelegislature must agree to it.
- Appraisal: A determination of property value.
- Business: includes every trade, occupation, and profession. See Kentucky Statutes 362.1-101
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Limited liability partnership: means a partnership that has filed a statement of qualification under KRS §. See Kentucky Statutes 362.1-101
- 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 (2) or more persons to carry on as co- owners a business for profit formed under KRS §. See Kentucky Statutes 362.1-101
- Partnership agreement: means the agreement, whether written, oral, or implied, among the partners concerning the partnership, including amendments to the partnership agreement. See Kentucky Statutes 362.1-101
- Person: means an individual, an entity, or any other legal or commercial entity. See Kentucky Statutes 362.1-101
- Property: means all property, real, personal, or mixed, tangible or intangible, or any interest therein. See Kentucky Statutes 362.1-101
- Violate: includes failure to comply with. See Kentucky Statutes 446.010
(a) Vary the rights and duties under KRS § 362.1-105 except to eliminate the duty to provide copies of statements to all of the partners;
(b) Unreasonably restrict the right of access to books and records under KRS
362.1-403(2) or unreasonably restrict the right to information KRS § 362.1-
403(3);
(c) Eliminate the duty of loyalty under KRS § 362.1-404(2) or 362.1-603(2)(c), but:
1. The partnership agreement may identify specific types or categories of activities that do not violate the duty of loyalty, if not manifestly unreasonable; or
2. All of the partners or a number or percentage specified in the partnership agreement may authorize or ratify, after full disclosure of all material facts, a specific act or transaction that otherwise would violate the duty of loyalty;
(d) Unreasonably reduce the duty of care under KRS § 362.1-404(3) or 362.1-
603(2)(c);
(e) Eliminate the obligation of good faith and fair dealing under KRS § 362.1-404, but the partnership agreement may prescribe the standards by which the performance of the obligation is to be measured, if the standards are not manifestly unreasonable;
(f) Vary the power to dissociate as a partner under KRS § 362.1-602(1), except to require the notice under KRS § 362.1-601(1) to be in writing;
(g) Vary the right of a partner or the partnership to seek a partner’s expulsion by judicial determination or vary the right of a court to expel a partner in the events specified in KRS § 362.1-601(5);
(h) Vary the requirement to wind up the partnership business in cases specified in
KRS § 362.1-801(4), (5), or (6); or
(i) Vary the law applicable to a limited liability partnership under KRS § 362.1-
106(2); or
(j) Vary the liabilities and remedies under KRS § 362.1-405 to a greater extent than variations are in fact made under this section in the substantive rights in the partnership agreement giving rise to the partner claims at issue.
(3) If a written partnership agreement contains a provision to the effect that any amendment to the partnership agreement must be in writing and adopted in accordance with the provisions of the partnership agreement, that provision shall be enforceable in accordance with its terms, and any agreement among the partners
concerning the partnership which is not in writing and adopted in accordance with the provisions of the partnership agreement shall not be part of the partnership agreement.
(4) A partnership agreement may provide that the interest of any partner who fails to make any contribution that the partner is obligated to make or who otherwise violates an obligation undertaken in the partnership agreement shall be subject to specified penalties for, or specified consequences of, such failure. Such penalty or consequence may take the form of reducing or eliminating the defaulting partner’s proportionate interest in the partnership, subordinating the partner’s interest to that of nondefaulting partners, a forced sale of that interest, forfeiture of his or her interest, the lending by other partners of the amount necessary to meet the defaulting partner’s commitment, a fixing of the value of his or her interest by appraisal or by formula and redemption or sale of the interest in the partnership at such value, or other penalty or consequence.
(5) A partnership agreement may provide rights to any person, including a person who is not a partner or not otherwise a party to the partnership agreement, to the extent set forth therein.
(6) No partner or other person shall have a vested property right resulting from any provision of a partnership agreement which may not be modified by its amendment or as otherwise permitted by law.
Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 133, sec. 51, effective July 15, 2010. — Created
2006 Ky. Acts ch. 149, sec. 3, effective July 12, 2006.