to continue the business in the same name either by themselves or jointly with others,
may do so, during the agreed term for the partnership and for that purpose may
possess the partnership property, provided they secure the payment by bond approved
by the court, or pay any partner who has caused the dissolution wrongfully, the value of
his interest in the partnership at the dissolution, less any damages recoverable under the
second paragraph, No. 1 (b) of this article, and in like manner indemnify him against all
present or future partnership liabilities.
1. A partner who has caused the dissolution wrongfully shall have:
a. If the business is not continued under the provisions of the second paragraph, No.
2, all the rights of a partner under the first paragraph, subject to liability for damages
in the second paragraph, No. 1 (b), of this article.
b. If the business is continued under the second paragraph, No. 2, of this article, the
right as against his co- partners and all claiming through them in respect of their
interests in the partnership, to have the value of his interest in the partnership, less
any damage caused to his co- partners by the dissolution, ascertained and paid to
him in cash, or the payment secured by a bond approved by the court, and to be
released from all existing liabilities of the partnership; but in ascertaining the value
of the partner's interest the value of the good-will of the business shall not be
considered.
Rights of partners upon dissolution
1. Dissolution is caused without violation of the agreement.
2. In contravention of the agreement.
If partnership is dissolved without violation of the agreement
1. All partners may have the property sold for payment of partnership liabilities.
2. If there is surplus, after paying the liabilities of the firm, it shall be given in cash to the
partners.
If the partnership was dissolved in contravention of the agreement
1. The remaining partners have the right to sell partnership property to pay the
partnership’s liabilities and the surplus is distributed to the remaining partners as
well.
2. As against the guilty partner for the dissolution of the partnership, the remaining
partners have the right to recover damages for breach.
3. The remaining partners may also continue the business up to end of the
stipulated term of the partnership.
Art. 1838. Where a partnership contract is rescinded on the ground of the fraud or
misrepresentation of one of the parties thereto, the party entitled to rescind is, without
prejudice to any other right, entitled:
1. To a lien on, or right of retention of, the surplus of the partnership property after
satisfying the partnership liabilities to third persons for any sum of money paid by
him for the purchase of an interest in the partnership and for any capital or
advances contributed by him.
2. To stand, after all liabilities to third persons have been satisfied, in the place of
the creditors of the partnership for any payments made by him in respect of the
partnership liabilities.
3. To be indemnified by the person guilty of the fraud or making the representation
against all debts and liabilities of the partnership.
Right of partner to rescind contract of partnership
If one is induced by fraud or misrepresentation to become a partner, the contract is
voidable. If the contract is annulled, the injured party is entitled to restitution. Here,
the fraud or misrepresentation vitiates consent. However, until the partnership
contract is annulled by a proper action in court, the partnership relations exist
and the defrauded partner is liable for all obligations to third persons.
1. Right of injured partner where partnership contract rescinded
