Solving the problem of capital loss distribution upon dissolution of a service partnershipExpressO (2017)
This Comment offers a potential solution to the conflict between the common law tradition exemplified by Kovacik v. Reed and the Revised Uniform Partnership Act (“UPA (1997)”). The paradox arises at the dissolution of a partnership where one partner (the “capital partner”) has provided money to the venture and other partner (the “service partner”) has simply contributed his services, without drawing a salary. The partners have agreed to share future profits equally. Like many partners, they have not bargained at the outset over what will happen if their venture loses money. When the partnership does lose money, the capital partner seeks contribution from the service partner. Both the original Uniform Partnership Act (“UPA (1914)”) and the UPA (1997) require, in absence of contrary agreement, that the service partner share losses equally with the capital partner. But the Kovacik rule says that the service partner need not pay in for losses. This comment offers a potential solution to the Kovacik problem: the requirement of increased evidentiary burden to demonstrate an agreement if the court is to absolve the service partner from losses.
- business law,
- business litigation
Publication DateSummer August 1, 2017
Citation InformationJeffrey John Miles. "Solving the problem of capital loss distribution upon dissolution of a service partnership" ExpressO (2017)
Available at: http://works.bepress.com/jeffrey_miles/3/
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