§ 61-1-603 — Effect of partner's dissociation

(a) (1) If a partner's dissociation results in a dissolution and winding up of the partnership business, part 8 of this chapter applies; otherwise, part 7 of this chapter applies. (2) Notwithstanding subdivision (a)(1) or part 6, part 7, or part 8 of this chapter to the contrary, with respect to a family partnership: (A) If a partner dissociates or is dissociated as described in § 61-1-601(1), (6), (7), (8), (9), or (10) , then the dissociation: (i) Does not cause the winding up of the partnership business under part 8 of this chapter; and (ii) Does not obligate or cause the partnership to purchase the dissociating partner's interest in the partnership as provided under § 61-1-701 , unless a written partnership agreement provides otherwise; and (B) The dissociating partner's interest in the partnership must for all purposes be treated as the interest of a transferee of the dissociating partner's share of the profits and losses of the partnership and the partner's right to receive distributions, as contemplated in §§ 61-1-502 and 61-1-503(b) , and the dissociated partner is not deemed a partner for purposes of § 61-1-306 but may be deemed a transferee of the partnership interest. (b) Upon a partner's dissociation: (1) The partner's right to participate in the management and conduct of the partnership business terminates, except as otherwise provided in § 61-1-803 ; (2) The partner's duty of loyalty under § 61-1-404(b)(3) terminates; and (3) The partner's duty of loyalty under § 61-1-404(b)(1) and (2) and duty of care under § 61-1-404(c) continue only with regard to matters arising and events occurring before the partner's dissociation, unless the partner participates in winding up the partnership's business pursuant to § 61-1-803 .

Legislative History

Amended by 2024 Tenn. Acts, ch. 695,s 9, eff. 7/1/2024. Acts 2001, ch. 353.