Buchanan

1
Buchanan Tullock
Expected decision- making costs
(externali- zation and costs of agreement)
Optimal point
Number of votes required
2
Partnership governance

• Management
• What issues
• Allocation of votes
• How many votes decide?
• Statute and agreement McCallum
• Transfer Rapoport
• Dissolution Page

3
Partnership property interests
Chairs, tables, other assets
profits
Partner management rights
Partnership entity
Individual partner
partnership decision
Partnership decision
assignee
buyer
New partner
4
Partnership dissolution
Continuation of business (and partnership under
RUPA)
Partner A Partner B Partner C
goodwill Assets liabilities
Partner A Partner B Partner D
dissociation
Partnership interest Liabilities
Partnership 2
Partnership 1
Dissolution and winding up of partnership (UPA)
Dissolution and winding up of partnership and
business. Debts paid and assets sold (UPA/RUPA)
Termination
5
UPA Dissolution

• Dissociation (29)
• (1) Non-wrongful dissolution (31(1), (3)-(5))
• Liquidate, or continue if partners agree (38(1)
• If continue gt buyout (41(3) and 42)
• If liquidate gt wind up (37) and payoff (40)
• (2) Wrongful dissolution (31(2), 31(6),
  32(1)(c-d))
• --Continue if all but dissolving partner agree
  (38(2b))
• If continue gt buyout less damages and goodwill
  (38(2) and 42)
• If liquidate gt wind up (37), sell and pay
  damages (38(2a) and 40)

6
RUPA

• Dissociation (601) Buyout or liquidation (603)
• Dissociation gtDissolution and winding up under
  801 if
• Partnership at will and dissociation per 601(1)
• Partnership for term and dissociation per 602(b)
  or 601(6)-(10) unless majority agree to continue
• If buyout 701
• If dissolution Wind up (803) and distribution
  (807) unless dissolution waiver (802) or contrary
  agreement (103)

7
Partnership liquidation Business assets more
than liabilities
Assets Building Equipment Inventory Receivables
Work in process
Debt
Partner capital
Surplus
8
Partnership liquidation Business assets less
than liabilities
Assets Building Equipment Inventory Receivables
Work in process
Debt
Partner capital
Partner assets used to pay debts to third
parties and repay capital
9
Brown Goodwill
Business Commission Two-dollar Odd
lot Speculation
Vernon C. Brown Stephen, Vernon, brokers, dealers
Vernon C. Brown Vernon, brokers, dealers
payment
Stephens estate