US Laws, Codes, Statutes & Cases

Chapter 67 — Partnerships; Limited Liability Partnerships

 

2007 EDITION

 

PARTNERSHIPS; LIMITED LIABILITY PARTNERSHIPS

 

CORPORATIONS AND PARTNERSHIPS

 

GENERAL PROVISIONS

 

67.005       Definitions

 

PARTNERSHIPS

 

67.010       Knowledge and notice

 

67.015       Effect of partnership agreement; non- waivable provisions

 

67.020       Supplemental principles of law

 

67.025       Governing law

 

(Nature of Partnership)

 

67.050       Partnership as entity

 

67.055       Creation of partnership

 

67.060       Partnership property

 

67.065       When property is partnership property

 

67.070       General powers of a partnership

 

(Relations of Partners to Persons Dealing With Partnership)

 

67.090       Partner agent of partnership

 

67.095       Transfer of partnership property

 

67.100       Partnership liable for partner’s actionable conduct

 

67.105       Partner’s liability

 

67.110       Actions by and against partnership and partners

 

67.115       Liability of purported partner

 

(Relations of Partners to Each Other and to Partnership)

 

67.140       Partner’s rights and duties

 

67.145       Distributions in kind

 

67.150       Partner’s rights and duties with respect to information

 

67.155       General standards of partner’s conduct

 

67.160       Actions by partnership and partners

 

67.165       Continuation of partnership beyond definite term or particular undertaking

 

(Transferees and Creditors of Partner)

 

67.190       Partner not co-owner of partnership property

 

67.195       Partner’s transferable interest in partnership

 

67.200       Transfer of whole or part of partner’s transferable interest

 

67.205       Partner’s transferable interest subject to charging order

 

(Partner’s Dissociation)

 

67.220       Events causing partner’s dissociation

 

67.225       Partner’s power to dissociate; wrongful dissociation

 

67.230       Effect of partner’s dissociation

 

(Partner’s Dissociation When Business Not Wound Up)

 

67.250       Purchase of dissociated partner’s interest

 

67.255       Dissociated partner’s power to bind and liability to partnership

 

67.260       Dissociated partner’s liability to other persons

 

67.265       Continued use of partnership name

 

(Winding Up Partnership Business)

 

67.290       Events causing dissolution and winding up of partnership business

 

67.295       Partnership continues after dissolution

 

67.300       Right to wind up partnership business

 

67.305       Partner’s power to bind partnership after dissolution

 

67.310       Partner’s liability to other partners after dissolution

 

67.315       Settlement of accounts and contributions among partners

 

(Conversions and Mergers)

 

67.340       Definitions for ORS 67.340 to 67.365

 

67.342       Conversion

 

67.344       Action on plan of conversion

 

67.346       Articles of conversion

 

67.348       Effect of conversion; entity existence continues; assumed business name

 

67.360       Merger

 

67.362       Action on plan of merger

 

67.364       Articles of merger

 

67.365       Effect of merger

 

LIMITED LIABILITY PARTNERSHIPS

 

(General Provisions)

 

67.500       Eligibility for registration as a limited liability partnership; required vote

 

(Filing Documents)

 

67.520       Filing requirements

 

67.525       Filing, service, copying and certification fees

 

67.530       Effective time and date of document

 

67.535       Filing duty of Secretary of State

 

67.540       Appeal from actions of Secretary of State

 

67.545       Evidentiary effect of copy of filed document

 

67.550       Certificate of existence or authorization

 

(Secretary of State)

 

67.570       Powers

 

(Registration)

 

67.590       Application for registration; effective date; duration of status as limited liability partnership

 

67.595       Cancellation of registration; effect

 

(Partnership Powers)

 

67.610       Effect of changes in partnership on limited liability partnership status and liability of partners; amendment of application for registration

 

67.615       Distributions to partners

 

(Name)

 

67.625              Limited liability partnership name

 

(Service of Process)

 

67.635       Service of process on limited liability partnership

 

(Annual Report)

 

67.645       Annual report

 

(Administrative Revocation)

 

67.655       Grounds for administrative revocation

 

67.660       Procedure for and effect of administrative revocation

 

67.665       Reinstatement following administrative revocation

 

67.670       Appeal from denial of reinstatement

 

(Interstate Application)

 

67.680       Interstate application

 

FOREIGN LIMITED LIABILITY PARTNERSHIPS

 

(Authority to Transact Business)

 

67.700       Authority to transact business

 

67.705       Consequences of transacting business without authority

 

67.710       Application for authority to transact business; effective date of authorization

 

67.715       Amendment to application for authority

 

67.720       Limitations applicable to foreign limited liability partnerships

 

(Name)

 

67.730       Name of foreign limited liability partnership

 

(Withdrawal)

 

67.740       Withdrawal of foreign limited liability partnership

 

(Revocation)

 

67.750       Grounds for revocation

 

67.755       Procedure for and effect of revocation

 

67.760       Appeal from revocation

 

67.765       Reinstatement of authority

 

67.770              Action by Attorney General

 

MISCELLANEOUS

 

67.800       Uniformity of application and construction

 

67.805       Severability

 

67.810       Partnership subject to amendment or repeal of chapter

 

67.815       Short title

 

GENERAL PROVISIONS

 

      67.005 Definitions. As used in this chapter:

      (1) “Business” includes every trade, occupation, profession and commercial activity.

      (2) “Debtor in bankruptcy” means a person who is the subject of:

      (a) An order for relief under Title 11 of the United States Code or a comparable order under a successor statute of general application; or

      (b) A comparable order under federal, state or foreign law governing insolvency.

      (3) “Dissociated partner” means a partner with respect to whom an event specified in ORS 67.220 has occurred.

      (4) “Distribution” means a transfer of money or other property from a partnership to a partner in the partner’s capacity as a partner or to the partner’s transferee.

      (5) “Foreign limited liability partnership” means a partnership that:

      (a) Is formed under laws other than the law of this state; and

      (b) Has the status of a limited liability partnership under those laws.

      (6) “Limited liability partnership” means a partnership that has registered under ORS 67.590, and has not registered or qualified in any other jurisdiction other than as a foreign limited liability partnership.

      (7) “Partnership” means an association of two or more persons to carry on as co-owners a business for profit created under ORS 67.055, predecessor law, or comparable law of another jurisdiction. A partnership includes a limited liability partnership.

      (8) “Partnership agreement” means the agreement, whether written, oral or implied, among the partners concerning the partnership, including amendments to the partnership agreement.

      (9) “Partnership at will” means a partnership in which the partners have not agreed to remain partners until the expiration of a definite term or the completion of a particular undertaking.

      (10) “Partnership interest” or “partner’s interest in the partnership” means all of a partner’s interests in the partnership, including the partner’s transferable interest and all management and other rights.

      (11) “Person” means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision, agency, instrumentality or any other legal or commercial entity.

      (12) “Professional” means:

      (a) Accountants licensed under ORS 673.010 to 673.457 or the laws of another state;

      (b) Architects licensed under ORS 671.010 to 671.220 or the laws of another state;

      (c) Attorneys licensed under ORS 9.005 to 9.755 or the laws of another state;

      (d) Chiropractors licensed under ORS chapter 684 or the laws of another state;

      (e) Dentists licensed under ORS chapter 679 or the laws of another state;

      (f) Landscape architects licensed under ORS 671.310 to 671.459 or the laws of another state;

      (g) Naturopaths licensed under ORS chapter 685 or the laws of another state;

      (h) Nurse practitioners licensed under ORS 678.010 to 678.410 or the laws of another state;

      (i) Psychologists licensed under ORS 675.010 to 675.150 or the laws of another state;

      (j) Physicians licensed under ORS chapter 677 or the laws of another state;

      (k) Podiatrists licensed under ORS chapter 677 or the laws of another state;

      (L) Radiologic technologists licensed under ORS 688.405 to 688.605 or the laws of another state;

      (m) Real estate appraisers licensed under ORS chapter 674 or the laws of another state; and

      (n) Other persons providing to the public types of personal service or services substantially similar to those listed in paragraphs (a) to (m) of this subsection that may be lawfully rendered only pursuant to a license.

      (13) “Professional service” means the service rendered by a professional.

      (14) “Property” means all property, real, personal or mixed, tangible or intangible, or any interest therein.

      (15) “State” means a state of the United States, the District of Columbia, the Commonwealth of Puerto Rico or any territory or insular possession subject to the jurisdiction of the United States.

      (16) “Transfer” includes an assignment, conveyance, lease, mortgage, deed, encumbrance, creation of a security interest and any other disposition.

      (17) “Transferable interest of a partner in the partnership” means the partner’s share of the profits and losses of the partnership and the partner’s right to receive distributions. [1997 c.775 §1; 2003 c.14 §25]

 

PARTNERSHIPS

 

      67.010 Knowledge and notice. (1) A person knows a fact if the person has actual knowledge of it.

      (2) A person has notice of a fact if the person:

      (a) Knows of it;

      (b) Has received a notification of it; or

      (c) Has reason to know it exists from all the facts known to the person at the time in question.

      (3) A person notifies or gives notification to another by taking steps reasonably required to inform the other person in the ordinary course, whether or not the other person learns of it.

      (4) A person receives a notification when the notification:

      (a) Comes to the person’s attention; or

      (b) Is addressed to the person and is duly delivered at the person’s place of business or at any other place held out by the person as a place for receiving communications.

      (5) Except as provided in subsection (6) of this section, a person other than an individual knows, has notice or receives a notification of a fact for purposes of a particular transaction when the individual conducting the transaction knows, has notice or receives a notification of the fact, or in any event when the fact would have been brought to the individual’s attention if the person had exercised reasonable diligence.

      (6) A partner’s knowledge, notice or receipt of a notification of a fact relating to the partnership is effective immediately as knowledge by, notice to or receipt of a notification by the partnership, except in the case of a fraud on the partnership committed by or with the consent of that partner. [1997 c.775 §2]

 

      67.015 Effect of partnership agreement; nonwaivable provisions. (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 chapter governs relations among the partners and between the partners and the partnership.

      (2) The partnership agreement may not:

      (a) Unreasonably restrict the right of access to books and records under ORS 67.150 (2);

      (b) Eliminate the duty of loyalty under ORS 67.155 (2) or 67.230 (2)(c), but:

      (A) The partnership agreement may identify specific types or categories of activities that do not violate the duty of loyalty, if not unconscionable; or

      (B) All 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;

      (c) Unreasonably reduce the duty of care under ORS 67.155 (3) or 67.230 (2)(c);

      (d) Eliminate the obligation of good faith and fair dealing under ORS 67.155 (4), but the partnership agreement may prescribe the standards by which the performance of the obligation is to be measured, if the standards are not unconscionable;

      (e) Vary the power to dissociate as a partner under ORS 67.225 (1), except to require the notice under ORS 67.220 (1) of this Act to be in writing;

      (f) Vary the right of a court to expel a partner in the events specified in ORS 67.220 (5);

      (g) Vary the requirement to wind up the partnership business in cases specified in ORS 67.290 (4), (5), (6) or (7);

      (h) Choose a governing law not permitted under ORS 67.025 (1) or vary the application of this state’s law with respect to a limited liability partnership or a foreign limited liability partnership pursuant to ORS 67.025 (2) or (3); or

      (i) Restrict rights of third parties under this chapter. [1997 c.775 §3]

 

      67.020 Supplemental principles of law. (1) Unless displaced by particular provisions of this chapter, the principles of law and equity supplement this chapter.

      (2) If an obligation to pay interest arises under this chapter and the rate is not specified, the rate is that specified in ORS 82.010. [1997 c.775 §4]

 

      67.025 Governing law. (1) Except as otherwise provided in subsections (2) and (3) of this section, the relations among the partners and between the partners and the partnership and the liability of the partners for obligations of the partnership are governed by:

      (a) The law of the state chosen by the partners to govern if that state bears a reasonable relation to the partners or to the partnership business and affairs; or

      (b) If the partners do not choose a governing law under paragraph (a) of this subsection, the law of the state in which the partnership has its principal office from which the partnership conducts its business.

      (2) With respect to a limited liability partnership, the law of this state governs the relations among the partners and between the partners and the partnership, and the liability of the partners for obligations of the limited liability partnership.

      (3) With respect to a foreign limited liability partnership:

      (a) The laws of the state or other jurisdiction under which a foreign limited liability partnership is formed governs the internal affairs of the partnership and the relations among the partners and between the partners and the partnership;

      (b) Except as provided in paragraph (c) of this subsection, the liability of a partner of a foreign limited liability partnership for the obligations of the foreign limited liability partnership arising in this state shall be the same as the liability of a partner of a limited liability partnership under ORS 67.105 for the obligations of the limited liability partnership; and

      (c) The partners of a foreign limited liability partnership who are professionals who hold licenses to render professional service in this state and who practice more than incidentally in this state shall be personally liable in their capacity as partners to the same extent and in the same manner as provided for shareholders of a foreign professional corporation under ORS 58.185 and 58.187 and as otherwise provided in this chapter. [1997 c.775 §5]

 

(Nature of Partnership)

 

      67.050 Partnership as entity. (1) A partnership is an entity distinct from its partners.

      (2) A limited liability partnership continues to be the same entity that existed before the filing of a registration under ORS 67.590 and remains the same entity if its registration ceases. [1997 c.775 §6]

 

      67.055 Creation of partnership. (1) Except as otherwise provided in subsection (3) of this section, the association of two or more persons to carry on as co-owners a business for profit creates a partnership, whether or not the persons intend to create a partnership.

      (2) A partnership may be created under this chapter, a predecessor statute or a comparable law of another jurisdiction.

      (3) An association or entity created under a law other than the laws described in subsection (2) of this section is not a partnership.

      (4) In determining whether a partnership is created, the following rules apply:

      (a) Factors indicating that persons have created a partnership include:

      (A) Their receipt of or right to receive a share of profits of the business;

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

      (C) Their participation or right to participate in control of the business;

      (D) Their sharing or agreeing to share losses of the business or liability for claims by third parties against the business; and

      (E) Their contributing or agreeing to contribute money or property to the business.

      (b) Joint tenancy, tenancy in common, tenancy by the entireties, joint property, common property or part ownership does not by itself create a partnership, even if the co-owners share profits made by the use of the property.

      (c) The sharing of gross returns does not by itself create a partnership, even if the persons sharing them have a joint or common right or interest in property from which the returns are derived.

      (d) It is a rebuttable presumption that a person who receives a share of the profits of a business is a partner in the business, unless the profits were received in payment of:

      (A) A debt by installments or otherwise;

      (B) Wages or other compensation to an employee or independent contractor;

      (C) Rent;

      (D) Amounts owing to a former partner, a beneficiary, representative or designee of a deceased partner or a partner with a disability, or a transferee of a partnership interest;

      (E) Interest or other charge on a loan, whether or not the amount of payment varies with the profits of the business, and whether or not the loan agreement or instrument includes 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) Consideration for the sale of a business, including goodwill, or other property by installments or otherwise.

      (e) An agreement to share losses by the owners of a business is not necessary to create a partnership. [1997 c.775 §7; 2007 c.70 §16]

 

      67.060 Partnership property. Property acquired by a partnership is property of the partnership and not of the partners individually. [1997 c.775 §8]

 

      67.065 When property is partnership property. (1) Property is partnership property if acquired in the name of:

      (a) The partnership; or

      (b) One or more partners with an indication in the instrument transferring title to the property of the person’s capacity as a partner or of the existence of a partnership but without an indication of the name of the partnership.

      (2) Property is acquired in the name of the partnership by a transfer to:

      (a) The partnership in its name; or

      (b) One or more partners in their capacity as partners in the partnership, if the name of the partnership is indicated in the instrument transferring title to the property.

      (3) It is a rebuttable presumption that property is partnership property if purchased with partnership assets, even if not acquired in the name of the partnership or of one or more partners with an indication in the instrument transferring title to the property of the person’s capacity as a partner or of the existence of a partnership.

      (4) It is a rebuttable presumption that property acquired in the name of one or more of the partners, without an indication in the instrument transferring title to the property of the person’s capacity as a partner or of the existence of a partnership and without use of partnership assets, is separate property, even if used for partnership purposes. [1997 c.775 §9]

 

      67.070 General powers of a partnership. Unless restricted by applicable law, a partnership has the same powers as an individual to do all things necessary or convenient to carry on its business and affairs. [1997 c.775 §10]

 

(Relations of Partners to Persons Dealing With Partnership)

 

      67.090 Partner agent of partnership. (1) Each partner is an agent of the partnership for the purpose of its business. An act of a partner, including the execution of an instrument in the name of the partnership, for apparently carrying on in the ordinary course the partnership business or business of the kind carried on by the partnership binds the partnership, unless the partner had no authority to act for the partnership in the particular matter and the person with whom the partner was dealing knew or had received a notification that the partner lacked authority.

      (2) An act of a partner that is not for apparently carrying on in the ordinary course the partnership business or business of the kind carried on by the partnership, binds the partnership only if the act was authorized by the other partners. [1997 c.775 §11]

 

      67.095 Transfer of partnership property. (1) Partnership property may be transferred as follows:

      (a) Partnership property held in the name of the partnership may be transferred by an instrument of transfer executed by a partner in the name of the partnership.

      (b) Partnership property held in the name of one or more partners with an indication in the instrument transferring the property to them of their capacity as partners or of the existence of a partnership, but without an indication of the name of the partnership, may be transferred by an instrument of transfer executed by the persons in whose name the property is held.

      (c) Partnership property held in the name of one or more persons other than the partnership, without an indication in the instrument transferring the property to them of their capacity as partners or of the existence of a partnership, may be transferred by an instrument of transfer executed by the persons in whose name the property is held.

      (2) A partnership may recover partnership property from a transferee only if it proves that execution of the instrument of initial transfer did not bind the partnership under ORS 67.090 and:

      (a) As to a subsequent transferee who gave value for property transferred under subsection (1)(a) and (b) of this section, proves that prior to the transfer to the subsequent transferee, the subsequent transferee knew or had received a notification that the person who executed the instrument of initial transfer lacked authority to bind the partnership; or

      (b) As to a transferee who gave value for property transferred under subsection (1)(c) of this section, proves that prior to the transfer to the transferee, the transferee knew or had received a notification that the property was partnership property and that the person who executed the instrument of initial transfer lacked authority to bind the partnership.

      (3) A partnership may not recover partnership property from a subsequent transferee if the partnership would not have been entitled to recover the property, under subsection (2) of this section, from any earlier transferee of the property.

      (4) If a person holds all the partners’ interests in the partnership, all the partnership property vests in that person. The person may execute a document in the name of the partnership to evidence vesting of the property in that person and may file or record the document. [1997 c.775 §12]

 

      67.100 Partnership liable for partner’s actionable conduct. (1) A partnership is liable for loss or injury caused to a person, including a partner, or for a penalty incurred as a result of a wrongful act or omission or other actionable conduct of a partner acting in the ordinary course of business of the partnership or with authority of the partnership.

      (2) If, in the course of the partnership’s business or while acting with authority of the partnership, a partner receives or causes the partnership to receive money or property of a person not a partner, and the money or property is misapplied by a partner, the partnership is liable to such person for the loss. [1997 c.775 §13]

 

      67.105 Partner’s liability. (1) Except as otherwise provided in this section, all partners are liable jointly and severally for all obligations of the partnership unless otherwise agreed by the claimant or provided by law.

      (2) A person admitted as a partner into an existing partnership is not personally liable for any partnership obligation incurred before the person’s admission as a partner.

      (3)(a) An obligation of a partnership incurred while the partnership is a limited liability partnership, whether arising in contract, tort or otherwise, is solely the obligation of the partnership. A partner is not personally liable, directly or indirectly, by way of indemnification, contribution or otherwise, for such an obligation solely by reason of being or so acting as a partner.

      (b) Notwithstanding paragraph (a) of this subsection, a partner of a limited liability partnership shall continue to be liable for any obligation of the partnership for which the partner was liable before the partnership became a limited liability partnership.

      (c) Nothing in this subsection shall in any way affect or impair the ability of a partner to be released from any such obligation. This subsection applies to a partner’s liability notwithstanding anything inconsistent in the partnership agreement that existed immediately before the vote required to become a limited liability partnership under ORS 67.500 (3).

      (4) Notwithstanding subsection (3) of this section, the partners of a limited liability partnership who are professionals shall be personally liable in their capacity as partners to the same extent and in the same manner as provided for shareholders of a domestic professional corporation under ORS 58.185 and 58.187 and as otherwise provided in this chapter. [1997 c.775 §14]

 

      67.110 Actions by and against partnership and partners. (1) A partnership may sue and be sued in the name of the partnership.

      (2) An action may be brought against the partnership and, to the extent not inconsistent with ORS 67.105, any or all of the partners in the same action or in separate actions.

      (3) A judgment against a partnership is not by itself a judgment against a partner.

      (4) Except as provided by subsection (5) of this section, a creditor may proceed against one or more partners or their property to satisfy a judgment based on a claim that could have been successfully asserted against the partnership only if:

      (a) The partner is personally liable for the claim under ORS 67.105;

      (b) A judgment is also obtained against the partner; and

      (c) A judgment based on the same claim is obtained against the partnership that:

      (A) Has not been reversed or vacated; and

      (B) Remains unsatisfied for 90 days after:

      (i) The date of entry of the judgment; or

      (ii) The date of expiration or termination of the stay, if the judgment is contested by appropriate proceedings and execution on the judgment has been stayed.

      (5) Subsection (4) of this section does not prohibit a creditor from proceeding directly against one or more partners who are personally liable for the claim under ORS 67.105 or against their property without first seeking satisfaction from partnership property if:

      (a) The partnership is a debtor in bankruptcy;

      (b) The creditor and the partnership agreed that the creditor is not required to comply with subsection (4) of this section;

      (c) A court orders otherwise, based on a finding that partnership property subject to execution within the state is clearly insufficient to satisfy the judgment or that compliance with subsection (4) of this section is excessively burdensome; or

      (d) Liability is imposed on the partner by law or contract independently of the person’s status as a partner. [1997 c.775 §15]

 

      67.115 Liability of purported partner. (1) If a person, by words or conduct, purports to be a partner or consents to being represented by another as a partner in a partnership or with one or more persons not partners, the purported partner is liable to a person to whom the representation is made if that person relying on the false representation enters into a transaction with the actual or purported partnership. If the false representation is made in a public manner, the purported partner is liable to a person who relies upon it even if the purported partner is not aware of being held out as a partner to the claimant. If partnership liability results, the purported partner is liable with respect to that liability as if the purported partner were a partner. If no partnership liability results, the purported partner is liable with respect to that liability jointly and severally with any other person consenting to the representation.

      (2) A person falsely represented to be a partner is an agent of persons consenting to the representation to bind them to the same extent and in the same manner as if the purported partner were a partner, with respect to persons who enter into transactions in reliance upon the representation. If all the partners of the existing partnership consent to the representation, a partnership act or obligation results. If fewer than all the partners of the existing partnership consent to the representation, the person acting and the partners consenting to the representation are jointly and severally liable.

      (3) Except as otherwise provided in subsections (1) and (2) of this section, persons who are not partners to each other are not liable as partners to other persons. [1997 c.775 §16]

(Relations of Partners to Each Other and to Partnership)

 

      67.140 Partner’s rights and duties. (1) Each partner is deemed to have an account that is:

      (a) Credited with an amount equal to the money plus the value of any other property, net of the amount of any liabilities, the partner contributes to the partnership and the partner’s share of the partnership profits; and

      (b) Charged with an amount equal to the money plus the value of any other property, net of the amount of any liabilities, distributed by the partnership to the partner and the partner’s share of the partnership losses.</