Flashcards Studio

NovaBuild Traders, a general partnership formed by partners N, O, and P to operate a hardware store, is governed by a partnership agreement that dissolution occurs upon withdrawal and winding up is to be conducted by the remaining partners. After a dispute, O withdraws from the partnership. N and P proceed to dissolve the firm and appoint N as the winding-up partner. During winding up, N signs a three-year warehouse lease in the partnership name and enters into a liquidation services contract with Supplier L in the partnership name to facilitate asset liquidation. The partnership assets prove insufficient to satisfy a debt incurred prior to dissolution in favor of Creditor Z.
(a) Identify the controlling doctrine governing dissolution and winding up of a general partnership and the scope of authority of the winding-up partner.
(b) Distinguish dissolution from winding up, and explain who can bind the partnership to third parties during winding up and why.
(c) Apply the doctrine to the facts: Is Z entitled to recover from the partnership assets? If those assets are insufficient, can Z pursue the personal assets of N or P? Explain.