§ 61-2-502 — Obligation of partner - Failure to contribute

Tennessee § 61-2-502

• Jurisdiction: Tennessee
• Title: 61

Text

(a) Except as provided in the partnership agreement, a partner is obligated to the limited partnership to perform any promise to contribute cash or property or to perform services, even if he is unable to perform because of death, disability or any other reason. If a partner does not make the required contribution of property or services, he is obligated at the option of the limited partnership to contribute cash equal to that portion of the agreed value (as stated in the records of the limited partnership) of the contribution that has not been made. The foregoing option shall be in addition to, and not in lieu of, any other rights, including the right to specific performance, that the limited partnership may have against such partner under the partnership agreement or applicable law. (b) Unless otherwise provided in the partnership agreement, the obligation of a partner to make a contribution or return money or other property paid or distributed in violation of this chapter may be compromised only by consent of all the partners. Notwithstanding the compromise, a creditor of a limited partnership who extends credit after the entering into of a partnership agreement or an amendment thereto which, in either case, reflects the obligation, and before the amendment thereof to reflect the compromise, may enforce the original obligation to the extent that, in extending credit, the creditor reasonably relied on the obligation of a partner to make a contribution or return. A conditional obligation of a partner to make a contribution or return money or other property to a limited partnership may not be enforced unless the conditions to the obligation have been satisfied or waived as to or by such partner. Conditional obligations include contributions payable upon a discretionary call of a limited partnership or a general partner prior to the time the call occurs. (c) A partnership agreement may provide that the interest of any partner who fails to make any contribution that he is obligated to make shall be subject to specified penalties for, or specified consequences of, such failure. Such penalty or consequence may take the form of: (1) Reducing or eliminating the defaulting partner's proportionate interest in the limited partnership; (2) Subordinating his partnership interest to that of nondefaulting partners; (3) A forced sale of his partnership interest; (4) Forfeiture of his partnership interest; (5) The lending by other partners of the amount necessary to meet his commitment; (6) A fixing of the value of his partnership interest by appraisal or by formula and redemption or sale of his partnership interest at such value; or (7) Other penalty or consequence.

Legislative History

Acts 1988, ch. 922, § 1; 1989, ch. 270, §§ 48-51.