54. General Partnership: right of outgoing partner to share profits

If a partner of a General Partnership has died or otherwise ceased to be a partner, and the surviving or continuing partners conduct the business, purpose or activity of the partnership with its capital or assets without any final settlement of accounts between the partnership and the outgoing partner (or that partner’s estate), then, in the absence of any agreement to the contrary, the outgoing partner (or that partner’s estate) is entitled to the share of the profits made since the dissolution of the partnership that the Court considers just in the circumstances.

55. General Partnership: outgoing partner’s share to be debt

Unless otherwise agreed by all the partners of a General Partnership, the amount owing from surviving or continuing partners to an outgoing partner (or the partner’s estate) in relation to the outgoing partner’s share is a debt accruing on the day of the partnership’s dissolution.

56. General Partnership: distribution of assets on dissolution

Unless otherwise agreed by all the partners of a General Partnership, the following provisions apply when settling accounts between the partners after the dissolution of the partnership:

• (a) losses, including losses and deficiencies of capital, must be paid first out of profits, next out of capital, and lastly, if necessary, by the partners individually in the proportion in which they were entitled to share profits;
• (b) the assets of the partnership, including the amounts (if any) contributed by the partners to make up losses or deficiencies of capital, must be applied in the following way and order:

(i) in paying the debts and liabilities of the partnership to Persons who are not partners;

(ii) in paying to each partner rateably what is owing from the partnership to the partner for advances as distinguished from capital;

(iii) in paying to each partner rateably what is owing from the partnership to the partner in relation to capital;

(iv) the ultimate residue (if any) must be divided among the partners in the proportion in which profits are divisible.

57. Insolvency of General Partnership: postponement of certain rights

If an amount has been advanced to a General Partnership by way of an unsecured loan or for the purchase of goodwill in consideration for a share of profits of the partnership, and the partnership becomes insolvent, the lender or buyer is not entitled to recover any amount until the claims of all other creditors have been satisfied.