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2009 Texas Code
BUSINESS ORGANIZATIONS CODE
TITLE 4. PARTNERSHIPS
CHAPTER 152. GENERAL PARTNERSHIPS

BUSINESS ORGANIZATIONS CODE

TITLE 4. PARTNERSHIPS

CHAPTER 152. GENERAL PARTNERSHIPS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 152.001. DEFINITIONS. In this chapter:

(1) "Event of withdrawal" or "withdrawal" means an event

specified by Section 152.501(b).

(2) "Event requiring a winding up" means an event specified by

Section 11.051 or 11.057.

(3) "Foreign limited liability partnership" means a partnership

that:

(A) is foreign; and

(B) has the status of a limited liability partnership pursuant

to the laws of the jurisdiction of formation.

(4) "Other partnership provisions" means the provisions of

Chapters 151 and 154 and Title 1 to the extent applicable to

partnerships.

(5) "Transfer" includes:

(A) an assignment;

(B) a conveyance;

(D) a mortgage;

(E) a deed;

(F) an encumbrance; and

(G) the creation of a security interest.

(6) "Withdrawn partner" means a partner with respect to whom an

event of withdrawal has occurred.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.002. EFFECT OF PARTNERSHIP AGREEMENT; NONWAIVABLE AND

VARIABLE PROVISIONS. (a) Except as provided by Subsection (b),

a partnership agreement governs the relations of the partners and

between the partners and the partnership. To the extent that the

partnership agreement does not otherwise provide, this chapter

and the other partnership provisions govern the relationship of

the partners and between the partners and the partnership.

(b) A partnership agreement or the partners may not:

(1) unreasonably restrict a partner's right of access to books

and records under Section 152.212;

(2) eliminate the duty of loyalty under Section 152.205, except

that the partners by agreement may identify specific types of

activities or categories of activities that do not violate the

duty of loyalty if the types or categories are not manifestly

unreasonable;

(3) eliminate the duty of care under Section 152.206, except

that the partners by agreement may determine the standards by

which the performance of the obligation is to be measured if the

standards are not manifestly unreasonable;

(4) eliminate the obligation of good faith under Section

152.204(b), except that the partners by agreement may determine

the standards by which the performance of the obligation is to be

measured if the standards are not manifestly unreasonable;

(5) vary the power to withdraw as a partner under Section

152.501(b)(1), (7), or (8), except for the requirement that

notice be in writing;

(6) vary the right to expel a partner by a court in an event

specified by Section 152.501(b)(5);

(7) restrict rights of a third party under this chapter or the

other partnership provisions, except for a limitation on an

individual partner's liability in a limited liability partnership

as provided by this chapter;

(8) select a governing law not permitted under Sections 1.103

and 1.002(43)(C); or

(9) except as provided in Subsections (c) and (d), waive or

modify the following provisions of Title 1:

(A) Chapter 1, if the provision is used to interpret a provision

or to define a word or phrase contained in a section listed in

this subsection;

(B) Chapter 2, other than Sections 2.104(c)(2), 2.104(c)(3), and

2.113;

(D) Chapters 4, 5, 10, 11, and 12, other than Sections

11.057(a), (b), (c)(1), (c)(3), and (d).

modified in a partnership agreement if the provision that is

waived or modified authorizes the partnership to waive or modify

the provision in the partnership's governing documents.

(d) A provision listed in Subsection (b)(9) may be waived or

modified in a partnership agreement if the provision that is

modified specifies:

(1) the person or group of persons entitled to approve a

modification; or

(2) the vote or other method by which a modification is required

to be approved.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 104, eff. September 1, 2007.

Sec. 152.003. SUPPLEMENTAL PRINCIPLES OF LAW. The principles of

law and equity and the other partnership provisions supplement

this chapter unless otherwise provided by this chapter or the

other partnership provisions.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.004. RULE OF STATUTORY CONSTRUCTION NOT APPLICABLE.

The rule that a statute in derogation of the common law is to be

strictly construed does not apply to this chapter or the other

partnership provisions.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.005. APPLICABLE INTEREST RATE. If an obligation to pay

interest arises under this chapter and the rate is not specified,

the interest rate is the rate specified by Section 302.002,

Finance Code.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

SUBCHAPTER B. NATURE AND CREATION OF PARTNERSHIP

Sec. 152.051. PARTNERSHIP DEFINED. (a) In this section,

"association" does not have the meaning of the term "association"

under Section 1.002.

(b) Except as provided by Subsection (c) and Section 152.053(a),

an association of two or more persons to carry on a business for

profit as owners creates a partnership, regardless of whether:

(1) the persons intend to create a partnership; or

(2) the association is called a "partnership," "joint venture,"

or other name.

was created under a statute other than:

(1) this title and the provisions of Title 1 applicable to

partnerships and limited partnerships;

(2) a predecessor to a statute referred to in Subdivision (1);

(3) a comparable statute of another jurisdiction.

(d) The provisions of this chapter govern limited partnerships

only to the extent provided by Sections 153.003 and 153.152 and

Subchapter H, Chapter 153.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.052. RULES FOR DETERMINING IF PARTNERSHIP IS CREATED.

(a) Factors indicating that persons have created a partnership

include the persons':

(1) receipt or right to receive a share of profits of the

business;

(2) expression of an intent to be partners in the business;

(3) participation or right to participate in control of the

business;

(4) agreement to share or sharing:

(A) losses of the business; or

(B) liability for claims by third parties against the business;

and

(5) agreement to contribute or contributing money or property to

the business.

(b) One of the following circumstances, by itself, does not

indicate that a person is a partner in the business:

(1) the receipt or right to receive a share of profits as

payment:

(A) of a debt, including repayment by installments;

(B) of wages or other compensation to an employee or independent

contractor;

(D) to a former partner, surviving spouse or representative of a

deceased or disabled partner, or transferee of a partnership

interest;

(E) of interest or other charge on a loan, regardless of whether

the amount varies with the profits of the business, including a

direct or indirect present or future ownership interest in

collateral or rights to income, proceeds, or increase in value

derived from collateral; or

(F) of consideration for the sale of a business or other

property, including payment by installments;

(2) co-ownership of property, regardless of whether the

co-ownership:

(A) is a joint tenancy, tenancy in common, tenancy by the

entirety, joint property, community property, or part ownership;

(B) is combined with sharing of profits from the property;

(3) the right to share or sharing gross returns or revenues,

regardless of whether the persons sharing the gross returns or

revenues have a common or joint interest in the property from

which the returns or revenues are derived; or

(4) ownership of mineral property under a joint operating

agreement.

not necessary to create a partnership.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.053. QUALIFICATIONS TO BE PARTNER; NONPARTNER'S

LIABILITY TO THIRD PERSON. (a) A person may be a partner unless

the person lacks capacity apart from this chapter.

(b) Except as provided by Section 152.307, a person who is not a

partner in a partnership under Section 152.051 is not a partner

as to a third person and is not liable to a third person under

this chapter.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.054. FALSE REPRESENTATION OF PARTNERSHIP OR PARTNER.

(a) A false representation or other conduct falsely indicating

that a person is a partner with another person does not of itself

create a partnership.

(b) A representation or other conduct indicating that a person

is a partner in an existing partnership, if that is not the case,

does not of itself make that person a partner in the partnership.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.055. AUTHORITY OF CERTAIN PROFESSIONALS TO CREATE

PARTNERSHIP. (a) Persons licensed as doctors of medicine and

persons licensed as doctors of osteopathy by the Texas State

Board of Medical Examiners and persons licensed as podiatrists by

the Texas State Board of Podiatric Medical Examiners may create a

partnership that is jointly owned by those practitioners to

perform a professional service that falls within the scope of

practice of those practitioners.

(b) When doctors of medicine, osteopathy, and podiatry create a

partnership that is jointly owned by those practitioners, the

authority of each of the practitioners is limited by the scope of

practice of the respective practitioners and none can exercise

control over the other's clinical authority granted by their

respective licenses, either through agreements, bylaws,

directives, financial incentives, or other arrangements that

would assert control over treatment decisions made by the

practitioner.

State Board of Podiatric Medical Examiners continue to exercise

regulatory authority over their respective licenses.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.056. PARTNERSHIP AS ENTITY. A partnership is an entity

distinct from its partners.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

SUBCHAPTER C. PARTNERSHIP PROPERTY

Sec. 152.101. NATURE OF PARTNERSHIP PROPERTY. Partnership

property is not property of the partners. A partner or a

partner's spouse does not have an interest in partnership

property.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.102. CLASSIFICATION AS PARTNERSHIP PROPERTY. (a)

Property is partnership property if acquired in the name of:

(1) the partnership; or

(2) one or more partners, regardless of whether the name of the

partnership is indicated, if the instrument transferring title to

the property indicates:

(A) the person's capacity as a partner; or

(B) the existence of a partnership.

(b) Property is presumed to be partnership property if acquired

with partnership property, regardless of whether the property is

acquired as provided by Subsection (a).

presumed to be the partner's property, regardless of whether the

property is used for partnership purposes, if the instrument

transferring title to the property does not indicate the person's

capacity as a partner or the existence of a partnership, and if

the property is not acquired with partnership property.

(d) For purposes of this section, property is acquired in the

name of the partnership by a transfer to:

(1) the partnership in its name; or

(2) one or more partners in the partners' capacity as partners

in the partnership, if the name of the partnership is indicated

in the instrument transferring title to the property.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

SUBCHAPTER D. RELATIONSHIP BETWEEN PARTNERS AND BETWEEN PARTNERS

AND PARTNERSHIPS

Sec. 152.201. ADMISSION AS PARTNER. A person may become a

partner only with the consent of all partners.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.202. CREDITS OF AND CHARGES TO PARTNER. (a) Each

partner is credited with an amount equal to:

(1) the cash and the value of property the partner contributes

to a partnership; and

(2) the partner's share of the partnership's profits.

(b) Each partner is charged with an amount equal to:

(1) the cash and the value of other property distributed by the

partnership to the partner; and

(2) the partner's share of the partnership's losses.

of the partnership's profits and is chargeable with a share of

the partnership's capital or operating losses in proportion to

the partner's share of the profits.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.203. RIGHTS AND DUTIES OF PARTNER. (a) Each partner

has equal rights in the management and conduct of the business of

a partnership. A partner's right to participate in the management

and conduct of the business is not community property.

(b) A partner may use or possess partnership property only on

behalf of the partnership.

services performed for a partnership other than reasonable

compensation for services rendered in winding up the business of

the partnership.

(d) A partner who, in the proper conduct of the business of the

partnership or for the preservation of its business or property,

reasonably makes a payment or advance beyond the amount the

partner agreed to contribute, or who reasonably incurs a

liability, is entitled to be repaid and to receive interest from

the date of the:

(1) payment or advance; or

(2) incurrence of the liability.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.204. GENERAL STANDARDS OF PARTNER'S CONDUCT. (a) A

partner owes to the partnership, the other partners, and a

transferee of a deceased partner's partnership interest as

designated in Section 152.406(a)(2):

(1) a duty of loyalty; and

(2) a duty of care.

(b) A partner shall discharge the partner's duties to the

partnership and the other partners under this code or under the

partnership agreement and exercise any rights and powers in the

conduct or winding up of the partnership business:

(1) in good faith; and

(2) in a manner the partner reasonably believes to be in the

best interest of the partnership.

chapter or under the partnership agreement merely because the

partner's conduct furthers the partner's own interest.

(d) A partner, in the partner's capacity as partner, is not a

trustee and is not held to the standards of a trustee.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2005, 79th Leg., Ch.

64, Sec. 77, eff. January 1, 2006.

Sec. 152.205. PARTNER'S DUTY OF LOYALTY. A partner's duty of

loyalty includes:

(1) accounting to and holding for the partnership property,

profit, or benefit derived by the partner:

(A) in the conduct and winding up of the partnership business;

(B) from use by the partner of partnership property;

(2) refraining from dealing with the partnership on behalf of a

person who has an interest adverse to the partnership; and

(3) refraining from competing or dealing with the partnership in

a manner adverse to the partnership.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.206. PARTNER'S DUTY OF CARE. (a) A partner's duty of

care to the partnership and the other partners is to act in the

conduct and winding up of the partnership business with the care

an ordinarily prudent person would exercise in similar

circumstances.

(b) An error in judgment does not by itself constitute a breach

of the duty of care.

partner acts on an informed basis and in compliance with Section

152.204(b).

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.207. STANDARDS OF CONDUCT APPLICABLE TO PERSON WINDING

UP PARTNERSHIP BUSINESS. Sections 152.204-152.206 apply to a

person winding up the partnership business as the personal or

legal representative of the last surviving partner to the same

extent that those sections apply to a partner.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.208. AMENDMENT TO PARTNERSHIP AGREEMENT. A partnership

agreement may be amended only with the consent of all partners.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.209. DECISION-MAKING REQUIREMENT. (a) A difference

arising in a matter in the ordinary course of the partnership

business may be decided by a majority-in-interest of the

partners.

(b) An act outside the ordinary course of business of a

partnership may be undertaken only with the consent of all

partners.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.210. PARTNER'S LIABILITY TO PARTNERSHIP AND OTHER

PARTNERS. A partner is liable to a partnership and the other

partners for:

(1) a breach of the partnership agreement; or

(2) a violation of a duty to the partnership or other partners

under this chapter that causes harm to the partnership or the

other partners.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.211. REMEDIES OF PARTNERSHIP AND PARTNERS. (a) A

partnership may maintain an action against a partner for a breach

of the partnership agreement or for the violation of a duty to

the partnership causing harm to the partnership.

(b) A partner may maintain an action against the partnership or

another partner for legal or equitable relief, including an

accounting of partnership business, to:

(1) enforce a right under the partnership agreement;

(2) enforce a right under this chapter, including:

(A) the partner's rights under Sections 152.201-152.209,

152.212, and 152.213;

(B) the partner's right on withdrawal to have the partner's

interest in the partnership redeemed under Subchapter H or to

enforce any other right under Subchapters G and H; and

(3) enforce the rights and otherwise protect the interests of

the partner, including rights and interests arising independently

of the partnership relationship; or

(4) enforce a right under Chapter 11.

for a remedy under this section is governed by other applicable

law.

(d) A right to an accounting does not revive a claim barred by

law.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.212. BOOKS AND RECORDS OF PARTNERSHIP. (a) In this

section, "access" includes the opportunity to inspect and copy

books and records during ordinary business hours.

(b) A partnership shall keep its books and records, if any, at

its chief executive office.

to a partner or an agent or attorney of a partner.

(d) The partnership shall provide a former partner or an agent

or attorney of a former partner access to books and records

pertaining to the period during which the former partner was a

partner or for any other proper purpose with respect to another

period.

(e) A partnership may impose a reasonable charge, covering the

costs of labor and material, for copies of documents furnished

under this section.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.213. INFORMATION REGARDING PARTNERSHIP. (a) On

request and to the extent just and reasonable, each partner and

the partnership shall furnish complete and accurate information

concerning the partnership to:

(1) a partner;

(2) the legal representative of a deceased partner or a partner

who has a legal disability; or

(3) an assignee.

(b) A legal representative of a deceased partner or a partner

who has a legal disability and an assignee are subject to the

duties of a partner with respect to information made available.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.214. CERTAIN THIRD-PARTY OBLIGATIONS NOT AFFECTED.

Sections 152. 203, 152.208, and 152.209 do not limit a

partnership's obligations to another person under Sections

152.301 and 152.302.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

SUBCHAPTER E. RELATIONSHIP BETWEEN PARTNERS AND OTHER PERSONS

Sec. 152.301. PARTNER AS AGENT. Each partner is an agent of the

partnership for the purpose of its business.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.302. BINDING EFFECT OF PARTNER'S ACTION. (a) Unless a

partner does not have authority to act for the partnership in a

particular matter and the person with whom the partner is dealing

knows that the partner lacks authority, an act of a partner,

including the execution of an instrument in the partnership name,

binds the partnership if the act is apparently for carrying on in

the ordinary course:

(1) the partnership business; or

(2) business of the kind carried on by the partnership.

(b) An act of a partner that is not apparently for carrying on

in the ordinary course a business described by Subsection (a)

binds the partnership only if authorized by the other partners.

partnership not otherwise binding on the partnership binds the

partnership if the property has been conveyed by the grantee or a

person claiming through the grantee to a holder for value without

knowledge that the partner exceeded that partner's authority in

making the conveyance.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 105, eff. September 1, 2007.

Sec. 152.303. LIABILITY OF PARTNERSHIP FOR CONDUCT OF PARTNER.

(a) A partnership is liable for loss or injury to a person,

including a partner, or for a penalty caused by or incurred as a

result of a wrongful act or omission or other actionable conduct

of a partner acting:

(1) in the ordinary course of business of the partnership; or

(2) with the authority of the partnership.

(b) A partnership is liable for the loss of money or property of

a person who is not a partner that is:

(1) received in the course of the partnership's business; and

(2) misapplied by a partner while in the custody of the

partnership.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.304. NATURE OF PARTNER'S LIABILITY. (a) Except as

provided by Subsection (b) or Section 152.801(a), all partners

are liable jointly and severally for a debt or obligation of the

partnership unless otherwise:

(1) agreed by the claimant; or

(2) provided by law.

(b) A person who is admitted as a partner into an existing

partnership does not have personal liability under Subsection (a)

for an obligation of the partnership that:

(1) arises before the partner's admission to the partnership;

(2) relates to an action taken or omission occurring before the

partner's admission to the partnership; or

(3) arises before or after the partner's admission to the

partnership under a contract or commitment entered into before

the partner's admission.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 106, eff. September 1, 2007.

Sec. 152.305. REMEDY. An action may be brought against a

partnership and any or all of the partners in the same action or

in separate actions.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.306. ENFORCEMENT OF REMEDY. (a) A judgment against a

partnership is not by itself a judgment against a partner. A

judgment may be entered against a partner who has been served

with process in a suit against the partnership.

(b) Except as provided by Subsection (c), a creditor may proceed

against one or more partners or the property of the partners to

satisfy a judgment based on a claim against the partnership only

if a judgment:

(1) is also obtained against the partner; and

(2) based on the same claim:

(A) is obtained against the partnership;

(B) has not been reversed or vacated; and

(i) the date on which the judgment is entered; or

(ii) the date on which the stay expires, if the judgment is

contested by appropriate proceedings and execution on the

judgment is stayed.

directly against one or more partners or the property of the

partners without first seeking satisfaction from partnership

property if:

(1) the partnership is a debtor in bankruptcy;

(2) the creditor and the partnership agreed that the creditor is

not required to comply with Subsection (b);

(3) a court orders otherwise, based on a finding that

partnership property subject to execution in the state is clearly

insufficient to satisfy the judgment or that compliance with

Subsection (b) is excessively burdensome; or

(4) liability is imposed on the partner by law independently of

the person's status as a partner.

(d) This section does not limit the effect of Section 152.801

with respect to a limited liability partnership.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.307. EXTENSION OF CREDIT IN RELIANCE ON FALSE

REPRESENTATION. (a) The rights of a person extending credit in

reliance on a representation described by Section 152.054 are

determined by applicable law other than this chapter and the

other partnership provisions, including the law of estoppel,

agency, negligence, fraud, and unjust enrichment.

(b) The rights and duties of a person held liable under

Subsection (a) are also determined by law other than the law

described by Subsection (a).

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

SUBCHAPTER F. TRANSFER OF PARTNERSHIP INTERESTS

Sec. 152.401. TRANSFER OF PARTNERSHIP INTEREST. A partner may

transfer all or part of the partner's partnership interest.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.402. GENERAL EFFECT OF TRANSFER. A transfer of all or

part of a partner's partnership interest:

(1) is not an event of withdrawal;

(2) does not by itself cause a winding up of the partnership

business; and

(3) against the other partners or the partnership, does not

entitle the transferee, during the continuance of the

partnership, to participate in the management or conduct of the

partnership business.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.403. EFFECT OF TRANSFER ON TRANSFEROR. After transfer,

the transferor continues to have the rights and duties of a

partner other than the interest transferred.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.404. RIGHTS AND DUTIES OF TRANSFEREE. (a) A

transferee of a partner's partnership interest is entitled to

receive, to the extent transferred, distributions to which the

transferor otherwise would be entitled.

(b) If an event requires a winding up of partnership business

under Subchapter I, a transferee is entitled to receive, to the

extent transferred, the net amount otherwise distributable to the

transferor.

not have liability as a partner solely as a result of the

transfer.

(d) For a proper purpose the transferee may require reasonable

information or an account of a partnership transaction and make

reasonable inspection of the partnership books. In a winding up

of partnership business, a transferee may require an accounting

only from the date of the latest account agreed to by all of the

partners.

(e) Until receipt of notice of a transfer, a partnership is not

required to give effect to a transferee's rights under this

section and Sections 152.401-152.403.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.405. POWER TO EFFECT TRANSFER OR GRANT OF SECURITY

INTEREST. A partnership is not required to give effect to a

transfer prohibited by a partnership agreement.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.406. EFFECT OF DEATH OR DIVORCE ON PARTNERSHIP

INTEREST. (a) For purposes of this code:

(1) on the divorce of a partner, the partner's spouse, to the

extent of the spouse's partnership interest, is a transferee of

the partnership interest from the partner;

(2) on the death of a partner, the partner's surviving spouse,

if any, and an heir, legatee, or personal representative of the

partner, to the extent of their respective partnership interest,

is a transferee of the partnership interest from the partner; and

(3) on the death of a partner's spouse, an heir, legatee, or

personal representative of the spouse, to the extent of their

respective partnership interest, is a transferee of the

partnership interest from the partner.

(b) An event of the type described by Section 152.501 occurring

with respect to a partner's spouse is not an event of withdrawal.

or sale of a partnership interest at any time, including the

death of an owner of the partnership interest.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

SUBCHAPTER G. WITHDRAWAL OF PARTNER

Sec. 152.501. EVENTS OF WITHDRAWAL. (a) A person ceases to be

a partner on the occurrence of an event of withdrawal.

(b) An event of withdrawal of a partner occurs on:

(1) receipt by the partnership of notice of the partner's

express will to withdraw as a partner on:

(A) the date on which the notice is received; or

(B) a later date specified by the notice;

(2) an event specified in the partnership agreement as causing

the partner's withdrawal;

(3) the partner's expulsion as provided by the partnership

agreement;

(4) the partner's expulsion by vote of a majority-in-interest of

the other partners if:

(A) it is unlawful to carry on the partnership business with

that partner;

(B) there has been a transfer of all or substantially all of

that partner's partnership interest, other than:

(i) a transfer for security purposes that has not been

foreclosed; or

(ii) the substitution of a successor trustee or successor

personal representative;

partnership notifies an entity partner, other than a nonfiling

entity or foreign nonfiling entity partner, that it will be

expelled because it has filed a certificate of termination or the

equivalent, its existence has been involuntarily terminated or

its charter has been revoked, or its right to conduct business

has been terminated or suspended by the jurisdiction of its

formation, if the certificate of termination or the equivalent is

not revoked or its existence, charter, or right to conduct

business is not reinstated; or

(D) an event requiring a winding up has occurred with respect to

a nonfiling entity or foreign nonfiling entity that is a partner;

(5) the partner's expulsion by judicial decree, on application

by the partnership or another partner, if the judicial decree

determines that the partner:

(A) engaged in wrongful conduct that adversely and materially

affected the partnership business;

(B) wilfully or persistently committed a material breach of:

(i) the partnership agreement; or

(ii) a duty owed to the partnership or the other partners under

Sections 152.204-152.206; or

made it not reasonably practicable to carry on the business in

partnership with that partner;

(6) the partner's:

(A) becoming a debtor in bankruptcy;

(B) executing an assignment for the benefit of a creditor;

a trustee, receiver, or liquidator of that partner or of all or

substantially all of that partner's property; or

(D) failing, not later than the 90th day after the appointment,

to have vacated or stayed the appointment of a trustee, receiver,

or liquidator of the partner or of all or substantially all of

the partner's property obtained without the partner's consent or

acquiescence, or not later than the 90th day after the date of

expiration of a stay, failing to have the appointment vacated;

(7) if a partner is an individual:

(A) the partner's death;

(B) the appointment of a guardian or general conservator for the

partner; or

become incapable of performing the partner's duties under the

partnership agreement;

(8) termination of a partner's existence;

(9) if a partner has transferred all of the partner's

partnership interest, redemption of the transferee's interest

under Section 152.611; or

(10) an agreement to continue the partnership under Section

11.057(d) if the partnership has received a notice from the

partner under Section 11.057(d) requesting that the partnership

be wound up.

144(2), eff. September 1, 2007.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2005, 79th Leg., Ch.

64, Sec. 78, eff. January 1, 2006.

Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 107, eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 144(2), eff. September 1, 2007.

Sec. 152.502. EFFECT OF EVENT OF WITHDRAWAL ON PARTNERSHIP AND

OTHER PARTNERS. A partnership continues after an event of

withdrawal. The event of withdrawal affects the relationships

among the withdrawn partner, the partnership, and the continuing

partners as provided by Sections 152.503-152.506 and Subchapter

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.503. WRONGFUL WITHDRAWAL; LIABILITY. (a) At any time

before the occurrence of an event requiring a winding up of

partnership business, a partner may withdraw from the partnership

and cease to be a partner as provided by Section 152.501.

(b) A partner's withdrawal is wrongful only if:

(1) the withdrawal breaches an express provision of the

partnership agreement;

(2) in the case of a partnership that has a period of duration,

is for a particular undertaking, or is required under its

partnership agreement to wind up the partnership on occurrence of

a specified event, before the expiration of the period of

duration, the completion of the undertaking, or the occurrence of

the event, as appropriate:

(A) the partner withdraws by express will;

(B) the partner withdraws by becoming a debtor in bankruptcy; or

other than a business trust, or an estate, the partner is

expelled or otherwise withdraws because the partner wilfully

dissolved or terminated; or

(3) the partner is expelled by judicial decree under Section

152.501(b)(5).

partnership or to the other partners, a wrongfully withdrawing

partner is liable to the partnership and to the other partners

for damages caused by the withdrawal.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 108, eff. September 1, 2007.

Sec. 152.504. WITHDRAWN PARTNER'S POWER TO BIND PARTNERSHIP.

(a) The action of a withdrawn partner occurring not later than

the first anniversary of the date of the person's withdrawal

binds the partnership if the transaction would bind the

partnership before the person's withdrawal and the other party to

the transaction:

(1) does not have notice of the person's withdrawal as a

partner;

(2) had done business with the partnership within one year

preceding the date of withdrawal; and

(3) reasonably believed that the withdrawn partner was a partner

at the time of the transaction.

(b) A withdrawn partner is liable to the partnership for loss

caused to the partnership arising from an obligation incurred by

the withdrawn partner after the withdrawal date and for which the

partnership is liable under Subsection (a).

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.505. EFFECT OF WITHDRAWAL ON PARTNER'S EXISTING

LIABILITY. (a) Withdrawal of a partner does not by itself

discharge the partner's liability for an obligation of the

partnership incurred before the date of withdrawal.

(b) The estate of a deceased partner is liable for an obligation

of the partnership incurred while the deceased was a partner to

the same extent that a withdrawn partner is liable for an

obligation of the partnership incurred before the date of

withdrawal.

before the date of withdrawal by an agreement to that effect

between the partner and a partnership creditor.

(d) If a creditor of a partnership has notice of a partner's

withdrawal and without the consent of the withdrawn partner

agrees to a material alteration in the nature or time of payment

of an obligation of the partnership incurred before the date of

withdrawal, the withdrawn partner is discharged from the

obligation.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.506. LIABILITY OF WITHDRAWN PARTNER TO THIRD PARTY. A

person who withdraws as a partner in a circumstance that is not

an event requiring a winding up of partnership business under

Section 11.051 or 11.057 is liable to another party as a partner

in a transaction entered into by the partnership or a surviving

partnership under Section 10.001 not later than the second

anniversary of the date of the partner's withdrawal only if the

other party to the transaction:

(1) does not have notice of the partner's withdrawal; and

(2) reasonably believed that the withdrawn partner was a partner

at the time of the transaction.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

SUBCHAPTER H. REDEMPTION OF WITHDRAWING PARTNER'S OR TRANSFEREE'S

INTEREST

Sec. 152.601. REDEMPTION IF PARTNERSHIP NOT WOUND UP. The

partnership interest of a withdrawn partner automatically is

redeemed by the partnership as of the date of withdrawal in

accordance with this subchapter if:

(1) the event of withdrawal occurs under Sections

152.501(b)(1)-(9) and an event requiring a winding up of

partnership business does not occur before the 61st day after the

date of the withdrawal; or

(2) the event of a withdrawal occurs under Section

152.501(b)(10).

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.602. REDEMPTION PRICE. (a) Except as provided by

Subsection (b) , the redemption price of a withdrawn partner's

partnership interest is the fair value of the interest on the

date of withdrawal.

(b) The redemption price of the partnership interest of a

partner who wrongfully withdraws before the expiration of the

partnership's period of duration, the completion of a particular

undertaking, or the occurrence of a specified event requiring a

winding up of partnership business is the lesser of:

(1) the fair value of the withdrawn partner's partnership

interest on the date of withdrawal; or

(2) the amount that the withdrawn partner would have received if

an event requiring a winding up of partnership business had

occurred at the time of the partner's withdrawal.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 109, eff. September 1, 2007.

Sec. 152.603. CONTRIBUTION OBLIGATION. If a wrongfully

withdrawing partner would have been required to make

contributions to the partnership under Section 152.707 or 152.708

if an event requiring winding up of the partnership business had

occurred at the time of withdrawal, the withdrawn partner is

liable to the partnership to make contributions to the

partnership in that amount and pay interest on the amount owed.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.604. SETOFF FOR CERTAIN DAMAGES. The partnership may

set off against the redemption price payable to the withdrawn

partner the damages for wrongful withdrawal under Section

152.503(b) and all other amounts owed by the withdrawn partner to

the partnership, whether currently due, including interest.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.605. ACCRUAL OF INTEREST. Interest payable under

Sections 152.602-152.604 accrues from the date of the withdrawal

to the date of payment.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.606. INDEMNIFICATION FOR CERTAIN LIABILITY. (a) A

partnership shall indemnify a withdrawn partner against a

partnership liability incurred before the date of withdrawal,

except for a liability:

(1) that is unknown to the partnership at the time; or

(2) incurred by an act of the withdrawn partner under Section

152.504.

(b) For purposes of this section, a liability is unknown to the

partnership if it is not known to a partner other than the

withdrawn partner.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.607. DEMAND OR PAYMENT OF ESTIMATED REDEMPTION. (a)

If a deferred payment is not authorized under Section 152.608 and

an agreement on the redemption price of a withdrawn partner's

interest is not reached before the 121st day after the date a

written demand for payment is made by either party, not later

than the 30th day after the expiration of the period, the

partnership shall:

(1) pay to the withdrawn partner in cash the amount the

partnership estimates to be the redemption price and any accrued

interest, reduced by any setoffs and accrued interest under

Section 152.604; or

(2) make written demand for payment of its estimate of the

amount owed by the withdrawn partner to the partnership, minus

any amount owed to the withdrawn partner by the partnership.

(b) If a deferred payment is authorized under Section 152.608 or

a contribution or other amount is owed by the withdrawn partner

to the partnership, the partnership may offer in writing to pay,

or deliver a written statement of demand for, the amount it

estimates to be the net amount owed, stating the amount and other

terms of the obligation.

or demand required or allowed by Subsection (a) or (b) must be

accompanied or followed promptly by:

(1) if payment, tender, offer, or demand is made or delivered by

the partnership, a statement of partnership property and

liabilities from the date of the partner's withdrawal and the

most recent available partnership balance sheet and income

statement, if any; and

(2) an explanation of the computation of the estimated payment

obligation.

(d) The terms of a payment, tender, offer, or demand under

Subsection (a) or (b) govern a redemption if:

(1) accompanied by written notice that:

(A) the payment or tendered amount, if made, fully satisfies a

party's obligations relating to the redemption of the withdrawn

partner's partnership interest; and

(B) an action to determine the redemption price, a contribution

obligation or setoff under Section 152.603 or 152.604, or other

terms of the redemption obligation must be commenced not later

than the first anniversary of the later of:

(i) the date on which the written notice is given; or

(ii) the date on which the information required by Subsection

(2) the party receiving the payment, tender, offer, or demand

does not commence an action in the period described by

Subdivision (1)(B).

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.608. DEFERRED PAYMENT ON WRONGFUL WITHDRAWAL. (a) A

partner who wrongfully withdraws before the expiration of the

partnership's period of duration, the completion of a particular

undertaking, or the occurrence of a specified event requiring a

winding up of partnership business is not entitled to receive any

portion of the redemption price until the expiration of the

period, the completion of the undertaking, or the occurrence of

the specified event, as appropriate, unless the partner

establishes to the satisfaction of a court that earlier payment

will not cause undue hardship to the partnership.

(b) A deferred payment accrues interest.

satisfaction of the court that security for a deferred payment is

appropriate.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 110, eff. September 1, 2007.

Sec. 152.609. ACTION TO DETERMINE TERMS OF REDEMPTION. (a) A

withdrawn partner or the partnership may maintain an action

against the other party under Section 152.211 to determine:

(1) the terms of redemption of that partner's interest,

including a contribution obligation or setoff under Section

152.603 or 152.604; or

(2) other terms of the redemption obligations of either party.

(b) The action must be commenced not later than the first

anniversary of the later of:

(1) the date of delivery of information required by Section

152.607(c); or

(2) the date written notice is given under Section 152.607(d).

withdrawn partner's interest, any contribution obligation or

setoff due under Section 152.603 or 152.604, and accrued interest

and shall enter judgment for an additional payment or refund.

(d) If deferred payment is authorized under Section 152.608, the

court shall also determine the security for payment if requested

to consider whether security is appropriate.

(e) If the court finds that a party failed to tender payment or

make an offer to pay or to comply with the requirements of

Section 152.607(c) or otherwise acted arbitrarily, vexatiously,

or not in good faith, the court may assess damages against the

party, including, if appropriate, in an amount the court finds

equitable:

(1) a share of the profits of the continuing business;

(2) reasonable attorney's fees; and

(3) fees and expenses of appraisers or other experts for a party

to the action.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.610. DEFERRED PAYMENT ON WINDING UP PARTNERSHIP. If a

partner withdraws under Section 152.501 and not later than the

60th day after the date of withdrawal an event requiring winding

up occurs under Section 11.051 or 11.057:

(1) the partnership may defer paying the redemption price to the

withdrawn partner until the partnership makes a winding up

distribution to the remaining partners; and

(2) the redemption price or contribution obligation is the

amount the withdrawn partner would have received or contributed

if the event requiring winding up had occurred at the time of the

partner's withdrawal.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.611. REDEMPTION OF TRANSFEREE'S PARTNERSHIP INTEREST.

(a) A partnership must redeem the partnership interest of a

transferee for its fair value if:

(1) the interest was transferred when:

(A) the partnership had a period of duration that had not yet

expired;

(B) the partnership was for a particular undertaking not yet

completed; or

partnership business on a specified event that had not yet

occurred;

(2) the partnership's period of duration has expired, the

particular undertaking has been completed, or the specified event

has occurred; and

(3) the transferee makes a written demand for redemption.

(b) If an agreement for the redemption price of a transferee's

interest is not reached before the 121st day after the date a

written demand for redemption is made, the partnership must pay

to the transferee in cash the amount the partnership estimates to

be the redemption price and any accrued interest from the date of

demand not later than the 30th day after the expiration of the

period.

Subsection (b) must be accompanied or followed by:

(1) a statement of partnership property and liabilities from the

date of the demand for redemption;

(2) the most recent available partnership balance sheet and

income statement, if any; and

(3) an explanation of the computation of the estimated payment

obligation.

(d) If the payment required by Subsection (b) is accompanied by

written notice that the payment is in full satisfaction of the

partnership's obligations relating to the redemption of the

transferee's interest, the payment, less interest, is the

redemption price unless the transferee, not later than the first

anniversary of the written notice, commences an action to

determine the redemption price.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 111, eff. September 1, 2007.

Sec. 152.612. ACTION TO DETERMINE TRANSFEREE'S REDEMPTION PRICE.

(a) A transferee may maintain an action against a partnership

to determine the redemption price of the transferee's interest.

(b) The court shall determine the redemption price of the

transferee's interest and accrued interest and enter judgment for

payment or refund.

payment or otherwise acted arbitrarily, vexatiously, or not in

good faith, the court may assess against the partnership in an

amount the court finds equitable:

(1) reasonable attorney's fees; and

(2) fees and expenses of appraisers or other experts for a party

to the action.

(d) The redemption of a transferee's interest under Sections

152.611(a) and (b) may be deferred as determined by the court if

the partnership establishes to the satisfaction of the court that

failure to defer redemption will cause undue hardship to the

partnership business.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

SUBCHAPTER I. SUPPLEMENTAL WINDING UP AND TERMINATION PROVISIONS

Sec. 152.701. EFFECT OF EVENT REQUIRING WINDING UP. On the

occurrence of an event requiring winding up of a partnership

business under Section 11.051 or 11.057:

(1) the partnership continues until the winding up of its

business is completed, at which time the partnership is

terminated; and

(2) the relationship among the partners is changed as provided

by this subchapter.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.702. PERSONS ELIGIBLE TO WIND UP PARTNERSHIP BUSINESS.

(a) After the occurrence of an event requiring a winding up of a

partnership business, the partnership business may be wound up

by:

(1) the partners who have not withdrawn;

(2) the legal representative of the last surviving partner; or

(3) a person appointed by the court to carry out the winding up

under Subsection (b).

(b) On application of a partner, a partner's legal

representative or transferee, or a withdrawn partner whose

interest is not redeemed under Section 152.608, a court, for good

cause, may appoint a person to carry out the winding up and may

make an order, direction, or inquiry that the circumstances

require.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.703. RIGHTS AND DUTIES OF PERSON WINDING UP PARTNERSHIP

BUSINESS. (a) To the extent appropriate for winding up, as soon

as reasonably practicable, and in the name of and for and on

behalf of the partnership, a person winding up a partnership's

business may take the actions specified in Sections 11.052,

11.053, and 11.055.

(b) Section 11.052(a)(2) shall not be applicable to a

partnership.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.704. BINDING EFFECT OF PARTNER'S ACTION AFTER EVENT

REQUIRING WINDING UP. After the occurrence of an event requiring

winding up of the partnership business, a partnership is bound by

a partner's act that:

(1) is appropriate for winding up; or

(2) would bind the partnership under Sections 152.301 and

152.302 before the occurrence of the event requiring winding up,

if the other party to the transaction does not have notice that

an event requiring winding up has occurred.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.705. PARTNER'S LIABILITY TO OTHER PARTNERS AFTER EVENT

REQUIRING WINDING UP. (a) Except as provided by Subsection (b),

after the occurrence of an event requiring winding up of the

partnership business, the losses with respect to which a partner

must contribute under Section 152.708(a) include losses from a

liability incurred under Section 152.704.

(b) A partner who incurs, with notice that an event requiring a

winding up of the partnership business has occurred, a

partnership liability under Section 152.704(2) by an act that is

not appropriate for winding up is liable to the partnership for a

loss caused to the partnership arising from that liability.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.706. DISPOSITION OF ASSETS. (a) In winding up the

partnership business, the property of the partnership, including

any required contributions of the partners under Sections 152.707

and 152.708, shall be applied to discharge its obligations to

creditors, including partners who are creditors other than in the

partners' capacities as partners.

(b) A surplus shall be applied to pay in cash the net amount

distributable to partners in accordance with their right to

distributions under Section 152.707.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.707. SETTLEMENT OF ACCOUNTS. (a) Each partner is

entitled to a settlement of all partnership accounts on winding

up the partnership business.

(b) In settling accounts among the partners, the partnership

interest of a withdrawn partner that is not redeemed under

Subchapter H is credited with a share of any profits for the

period after the partner's withdrawal but is charged with a share

of losses for that period only to the extent of profits credited

for that period.

the partnership property must be credited and charged to the

partners' capital accounts.

(d) The partnership shall make a distribution to a partner in an

amount equal to that partner's positive balance in the partner's

capital account. Except as provided by Section 152.304(b) or

152.801, a partner shall contribute to the partnership an amount

equal to that partner's negative balance in the partner's capital

account.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.708. CONTRIBUTIONS TO DISCHARGE OBLIGATIONS. (a)

Except as provided by Sections 152.304(b) and 152.801, to the

extent not taken into account in settling the accounts among

partners under Section 152.707:

(1) each partner shall contribute, in the proportion in which

the partner shares partnership losses, the amount necessary to

satisfy partnership obligations, excluding liabilities that

creditors have agreed may be satisfied only with partnership

property without recourse to individual partners;

(2) if a partner fails to contribute, the other partners shall

contribute the additional amount necessary to satisfy the

partnership obligations in the proportions in which the partners

share partnership losses; and

(3) a partner or partner's legal representative may enforce or

recover from the other partners, or from the estate of a deceased

partner, contributions the partner or estate makes to the extent

the amount contributed exceeds that partner's or the estate's

share of the partnership obligations.

(b) The estate of a deceased partner is liable for the partner's

obligation to contribute to the partnership.

partner or the estate of a deceased partner to contribute to a

partnership:

(1) the partnership;

(2) an assignee for the benefit of creditors of a partnership or

a partner; or

(3) a person appointed by a court to represent creditors of a

partnership or a partner.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.709. CANCELLATION OR REVOCATION OF EVENT REQUIRING

WINDING UP; CONTINUATION OF PARTNERSHIP. (a) If a partnership

has a period of duration, is for a particular undertaking, or is

required under its partnership agreement to wind up the

partnership on occurrence of a specified event, all of the

partners in the partnership may cancel under Section 11.152 an

event requiring a winding up specified in Section 11.051(1) or

(3), or Section 11.057(c)(1), by agreeing to continue the

partnership business notwithstanding the expiration of the

partnership's period of duration, the completion of the

undertaking, or the occurrence of the event, as appropriate,

other than the withdrawal of a partner. On reaching that

agreement, the event requiring a winding up is canceled, the

partnership is continued, and the partnership agreement is

considered amended to provide that the expiration, the

completion, or the occurrence of the event did not result in an

event requiring winding up of the partnership.

(b) A continuation of the business for 90 days by the partners

or those who habitually acted in the business during the

partnership's period of duration or the undertaking or preceding

the event, without a settlement or liquidation of the partnership

business and without objection from a partner, is prima facie

evidence of agreement by all partners to continue the business

under Subsection (a).

continue the partnership, may cancel under Section 11.152 an

event requiring winding up specified in Section 11.057(d) that

arises from a request to wind up from a partner.

(d) To approve a revocation under Section 11.151 by a

partnership of a voluntary decision to wind up pursuant to the

express will of all the partners as specified in Section

11.057(b), prior to completion of the winding up process, all the

partners must agree in writing to revoke the voluntary decision

to wind up and to continue the business of the partnership.

(e) To approve a revocation under Section 11.151 by a

partnership of a voluntary decision to wind up pursuant to the

express will of a majority-in-interest of the partners as

specified in Section 11.057(a), prior to completion of the

winding up process, a majority-in-interest of the partners must

agree in writing to revoke the voluntary decision to wind up and

to continue the business of the partnership.

(f) All of the partners of a partnership, by agreeing to

continue the partnership, may cancel under Section 11.152 an

event requiring winding up specified in Section 11.057(c)(3) that

arises from the sale of all or substantially all of the property

of the partnership.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 112, eff. September 1, 2007.

Sec. 152.710. REINSTATEMENT. To approve a reinstatement of a

partnership under Section 11.202, all remaining partners, or

another group or percentage of partners as specified by the

partnership agreement, must agree in writing to reinstate and

continue the business of the partnership.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

SUBCHAPTER J. LIMITED LIABILITY PARTNERSHIPS

Sec. 152.801. LIABILITY OF PARTNER. (a) Except as provided by

Subsection (b) or the partnership agreement, a partner in a

limited liability partnership is not personally liable to any

person, including a partner, directly or indirectly, by

contribution, indemnity, or otherwise, for a debt or obligation

of the partnership incurred while the partnership is a limited

liability partnership.

(b) A partner in a limited liability partnership is not

personally liable for a debt or obligation of the partnership

arising from an error, omission, negligence, incompetence, or

malfeasance committed by another partner or representative of the

partnership while the partnership is a limited liability

partnership and in the course of the partnership business unless

the first partner:

(1) was supervising or directing the other partner or

representative when the error, omission, negligence,

incompetence, or malfeasance was committed by the other partner

or representative;

(2) was directly involved in the specific activity in which the

error, omission, negligence, incompetence, or malfeasance was

committed by the other partner or representative; or

(3) had notice or knowledge of the error, omission, negligence,

incompetence, or malfeasance by the other partner or

representative at the time of the occurrence and then failed to

take reasonable action to prevent or cure the error, omission,

negligence, incompetence, or malfeasance.

effect of Subsection (a) in a limited liability partnership.

(d) In this section, "representative" includes an agent,

servant, or employee of a limited liability partnership.

(e) Subsections (a) and (b) do not affect:

(1) the liability of a partnership to pay its debts and

obligations from partnership property;

(2) the liability of a partner, if any, imposed by law or

contract independently of the partner's status as a partner; or

(3) the manner in which service of citation or other civil

process may be served in an action against a partnership.

(f) This section controls over the other parts of this chapter

and the other partnership provisions regarding the liability of

partners of a limited liability partnership, the chargeability of

the partners for the debts and obligations of the partnership,

and the obligations of the partners regarding contributions and

indemnity.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 47, eff. September 1, 2009.

Sec. 152.802. REGISTRATION. (a) In addition to complying with

Sections 152.803 and 152.804, a partnership, to become a limited

liability partnership, must file an application with the

secretary of state in accordance with Chapter 4 and this section.

The application must:

(1) set out:

(A) the name of the partnership;

(B) the federal tax identification number of the partnership;

this state or outside of this state, as applicable; and

(D) the number of partners at the date of application; and

(2) contain a brief statement of the partnership's business.

(b) The application must be signed by:

(1) a majority-in-interest of the partners; or

(2) one or more partners authorized by a majority-in-interest of

the partners.

partnership by the secretary of state on:

(1) the date on which a completed initial or renewal application

is filed in accordance with Chapter 4; or

(2) a later date specified in the application.

(d) A registration is not affected by subsequent changes in the

partners of the partnership.

(e) The registration of a limited liability partnership is

effective until the first anniversary of the date of registration

or a later effective date, unless the application is:

(1) withdrawn or revoked at an earlier time; or

(2) renewed in accordance with Subsection (g).

(f) A registration may be withdrawn by filing a withdrawal

notice with the secretary of state in accordance with Chapter 4.

A certificate from the comptroller stating that all taxes

administered by the comptroller under Title 2, Tax Code, have

been paid must be filed with the notice of withdrawal. A

withdrawal notice terminates the status of the partnership as a

limited liability partnership from the date on which the notice

is filed or a later date specified in the notice, but not later

than the expiration date under Subsection (e). A withdrawal

notice must:

(1) contain:

(A) the name of the partnership;

(B) the federal tax identification number of the partnership;

application under this subchapter; and

(D) the current street address of the partnership's principal

office in this state and outside this state, if applicable; and

(2) be signed by:

(A) a majority-in-interest of the partners; or

(B) one or more partners authorized by a majority-in-interest of

the partners.

(g) An effective registration may be renewed before its

expiration by filing an application with the secretary of state

in accordance with Chapter 4. A renewal application filed under

this subsection continues an effective registration for one year

after the date the registration would otherwise expire. The

renewal application must contain:

(1) current information required for an initial application; and

(2) the most recent date of registration of the partnership.

(h) The secretary of state may remove from its active records

the registration of a partnership the registration of which has:

(1) been withdrawn or revoked; or

(2) expired and not been renewed.

(i) The secretary of state is not responsible for determining

whether a partnership is in compliance with the requirements of

Section 152.804(a).

(j) A document filed under this subchapter may be amended by

filing an application for amendment of registration with the

secretary of state in accordance with Chapter 4 and this

subsection. The application for amendment must:

(1) contain:

(A) the name of the partnership;

(B) the tax identification number of the partnership;

(D) the date on which the document being amended was filed;

(E) a reference to the part of the document being amended; and

(F) the amendment or correction; and

(2) be signed by:

(A) a majority-in-interest of the partners; or

(B) one or more partners authorized by a majority-in-interest of

the partners.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 48, eff. September 1, 2009.

Sec. 152.803. NAME. The name of a limited liability partnership

must comply with Section 5.063.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.804. INSURANCE OR FINANCIAL RESPONSIBILITY. (a) A

limited liability partnership must:

(1) carry at least $100,000 of liability insurance of a kind

that is designed to cover the kind of error, omission,

negligence, incompetence, or malfeasance for which liability is

limited by Section 152.801(b); or

(2) provide $100,000 specifically designated and segregated for

the satisfaction of judgments against the partnership for the

kind of error, omission, negligence, incompetence, or malfeasance

for which liability is limited by Section 152.801(b) by:

(A) deposit of cash, bank certificates of deposit, or United

States Treasury obligations in trust or bank escrow;

(B) a bank letter of credit; or

(b) If the limited liability partnership is in compliance with

Subsection (a), the requirements of this section may not be

admissible or be made known to the jury in determining an issue

of liability for or extent of:

(1) the debt or obligation in question; or

(2) damages in question.

(1) compliance must be determined separately from the trial or

proceeding to determine:

(A) the partnership debt or obligation in question;

(B) the amount of the debt or obligation; or

(2) the burden of proof of compliance is on the person claiming

limitation of liability under Section 152.801(b).

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.805. LIMITED PARTNERSHIP. A limited partnership may

become a limited liability partnership by complying with

applicable provisions of Chapter 153.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

SUBCHAPTER K. FOREIGN LIMITED LIABILITY PARTNERSHIPS

Sec. 152.901. GENERAL. (a) A foreign limited liability

partnership is subject to Section 2.101 with respect to its

activities in this state to the same extent as a domestic limited

liability partnership.

(b) A foreign limited liability partnership may not be denied

registration because of a difference between the laws of the

jurisdiction under which the partnership is formed and the laws

of this state.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 113, eff. September 1, 2007.

Sec. 152.902. NAME. The name of a foreign limited liability

partnership must:

(1) satisfy the requirements of the jurisdiction of formation;

and

(2) comply with Section 5.063.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 114, eff. September 1, 2007.

Sec. 152.903. ACTIVITIES NOT CONSTITUTING TRANSACTING BUSINESS.

Without excluding other activities that do not constitute

transacting business in this state, a foreign limited liability

partnership is not considered to be transacting business in this

state for purposes of this code because it carries on in this

state one or more of the activities listed by Section 9.251.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.904. REGISTERED AGENT AND REGISTERED OFFICE. A foreign

limited liability partnership subject to this chapter shall

maintain a registered office and registered agent in this state

in the same manner and to the same extent as if the partnership

were a foreign filing entity. Subchapters E and F, Chapter 5,

apply to a foreign limited liability partnership to the same

extent those subchapters apply to a foreign filing entity.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2005, 79th Leg., Ch.

64, Sec. 79, eff. January 1, 2006.

Sec. 152.905. REGISTRATION PROCEDURE. (a) Before transacting

business in this state, a foreign limited liability partnership

must file an application for registration in accordance with this

section and Chapters 4 and 9.

(b) The application must be signed by:

(1) a majority-in-interest of the partners; or

(2) one or more partners authorized by a majority-in-interest of

the partners.

partnership on:

(1) the date on which a completed initial or renewal application

for registration is filed with the secretary of state in

accordance with Chapter 4; or

(2) a later date specified in the application.

(d) A registration is not affected by subsequent changes in the

partners of the partnership.

(e) The registration of a foreign limited liability partnership

is effective until the first anniversary of the date after the

date of registration or a later effective date, unless the

registration is:

(1) withdrawn or revoked at an earlier time; or

(2) renewed in accordance with Section 152.908.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 115, eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 116, eff. September 1, 2007.

Sec. 152.906. WITHDRAWAL OF REGISTRATION. (a) A registration

may be voluntarily withdrawn by filing a certificate of

withdrawal in accordance with this section and Section 9.011.

(b) In addition to the information required by Section 9.011,

the certificate of withdrawal must:

(1) contain:

(A) the federal tax identification number of the partnership;

and

(B) the date of effectiveness of the partnership's last

application for registration under this subchapter; and

(2) be signed by:

(A) a majority-in-interest of the partners; or

(B) one or more partners authorized by a majority-in-interest of

the partners.

administered by the comptroller under Title 2, Tax Code, have

been paid must be filed with the withdrawal of registration.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2005, 79th Leg., Ch.

64, Sec. 80, eff. January 1, 2006.

Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 49, eff. September 1, 2009.

Sec. 152.907. EFFECT OF CERTIFICATE OF WITHDRAWAL. A

certificate of withdrawal terminates the registration of the

partnership as a foreign limited liability partnership as of the

date on which the notice is filed or a later date specified in

the notice, but not later than the expiration date under Section

152.905(e).

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2005, 79th Leg., Ch.

64, Sec. 81, eff. January 1, 2006.

Sec. 152.908. RENEWAL OF REGISTRATION. (a) An effective

registration may be renewed before its expiration by filing a

renewal application for registration with the secretary of state

in accordance with Chapter 4.

(b) The renewal application must contain:

(1) current information required for an initial application for

registration; and

(2) the most recent date of registration of the partnership.

continues an effective registration for one year after the date

the registration would otherwise expire.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 117, eff. September 1, 2007.

Sec. 152.909. ACTION BY SECRETARY OF STATE. The secretary of

state may remove from its active records the registration of a

foreign limited liability partnership the registration of which

has:

(1) been withdrawn or revoked; or

(2) expired and not been renewed.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.910. EFFECT OF FAILURE TO REGISTER. (a) A foreign

limited liability partnership that transacts business in this

state without being registered is subject to Subchapter B,

Chapter 9, to the same extent as a foreign filing entity.

(b) A partner of a foreign limited liability partnership is not

liable for a debt or obligation of the partnership solely because

the partnership transacted business in this state without being

registered.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2005, 79th Leg., Ch.

64, Sec. 82, eff. January 1, 2006.

Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 118, eff. September 1, 2007.

Sec. 152.911. AMENDMENT. (a) A document filed under this

subchapter or an application for registration filed under Section

9.007 may be amended by filing with the secretary of state an

application for amendment of registration in accordance with

Chapter 4.

(b) The application for amendment must contain:

(1) the name of the partnership;

(2) the tax identification number of the partnership;

(3) the identity of the document being amended;

(4) a reference to the date on which the document being amended

was filed;

(5) the part of the document being amended; and

(6) the amendment or correction.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2005, 79th Leg., Ch.

64, Sec. 83, eff. January 1, 2006.

Sec. 152.912. EXECUTION OF APPLICATION FOR AMENDMENT. The

application for amendment must be signed by:

(1) a majority-in-interest of the partners; or

(2) one or more partners authorized by a majority-in-interest of

the partners.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.913. EXECUTION OF STATEMENT OF CHANGE OF REGISTERED

OFFICE OR REGISTERED AGENT. A statement filed by a foreign

limited liability partnership in accordance with Section 5.202

must be signed by:

(1) a majority-in-interest of the partners; or

(2) one or more partners authorized by a majority-in-interest of

the partners.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 152.914. REVOCATION OF REGISTRATION BY SECRETARY OF STATE.

(a) The secretary of state may revoke the registration of a

foreign limited liability partnership for the partnership's

failure to:

(1) file a report within the period required by law or pay a fee

or penalty prescribed by law when due and payable;

(2) maintain a registered agent or registered office address in

this state as required by law; or

(3) pay a fee required in connection with a filing, or payment

of the fee was dishonored when presented by the state for

payment.

(b) If it appears to the secretary of state that, with respect

to a foreign limited liability partnership, a circumstance

described by Subsection (a) exists, the secretary of state shall

provide notice to the partnership in the same manner and to the

same extent as notice is required to be provided to a foreign

filing entity under Sections 9.101 and 9.102.

foreign limited liability partnership if the partnership files an

application for reinstatement in accordance with Subsection (e),

accompanied by each amendment of the partnership's registration

that is required by intervening events, and:

(1) the foreign limited liability partnership has corrected the

circumstances that led to the revocation and any other

circumstances described by Subsection (a) that may exist,

including the payment of fees, interest, or penalties; or

(2) the secretary of state finds that the circumstances that led

to the revocation did not exist at the time of revocation.

(d) A foreign limited liability partnership, to have its

registration reinstated, must comply with the requirements of

this section not later than the date the registration would have

expired under Section 152.905(e) had the registration not been

revoked under this section.

(e) The foreign limited liability partnership shall file a

certificate of reinstatement in accordance with Chapter 4. The

certificate of reinstatement must contain:

(1) the name of the partnership;

(2) the filing number assigned by the filing officer to the

partnership;

(3) the effective date of the revocation of the partnership's

registration; and

(4) the name of the partnership's registered agent and the

address of the partnership's registered office.

(f) A tax clearance letter from the comptroller stating that a

foreign limited liability partnership has satisfied all franchise

tax liabilities and may be reinstated must be filed with the

certificate of reinstatement if the foreign limited liability

partnership is a taxable entity under Chapter 171, Tax Code.

Added by Acts 2005, 79th Leg., Ch.

64, Sec. 84, eff. January 1, 2006.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 119, eff. September 1, 2007.

Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 50, eff. September 1, 2009.

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2009 Texas Code BUSINESS ORGANIZATIONS CODE TITLE 4. PARTNERSHIPS CHAPTER 152. GENERAL PARTNERSHIPS

2009 Texas Code
BUSINESS ORGANIZATIONS CODE
TITLE 4. PARTNERSHIPS
CHAPTER 152. GENERAL PARTNERSHIPS