Partnership Law Act 2019

Financial reporting, dissolution of partnership, and other miscellaneous provisions - End of partnership - Dissolving a partnership

78: Rights where partnership dissolved for fraud or misrepresentation

You could also call this:

"What happens if someone lied to you when you joined a business partnership"

If you are part of a partnership and you find out that one of the other partners tricked you or lied to you when you joined, you have some special rights. You can end the partnership agreement, and when you do, you get to keep some money.

You can hold onto any extra money left over after the partnership pays its bills. From this money, you can take back what you paid to join the partnership and any money you put into the business.

If you paid any of the partnership's bills, you get to be paid back before other people who are owed money by the partnership.

The person who tricked you or lied to you has to pay for any debts or bills that the partnership owes.

You also keep any other rights you might have, on top of these special rights.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS206097.


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"If a partnership ends early, you might get back some of the money you paid to join"


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79: Right of outgoing partner or partner’s estate to share profits or obtain interest, or

"What happens to your share when you leave or die in a business partnership"

Part 4Financial reporting, dissolution of partnership, and other miscellaneous provisions
End of partnership: Dissolving a partnership

78Rights where partnership dissolved for fraud or misrepresentation

  1. If a partnership agreement is rescinded on the ground of the fraud or misrepresentation of one of the parties to the agreement, the party who is entitled to rescind (A) is entitled—

  2. to a lien on, or right of retention of, the surplus of the partnership assets (after satisfying the partnership liabilities) for—
    1. any sum of money paid by A for the purchase of a share in the partnership; and
      1. any capital contributed by A; and
      2. to stand in the place of the creditors of the firm for any payments made by A in respect of the partnership liabilities; and
        1. to be indemnified, by the person guilty of the fraud or of making the representation, against all the debts and liabilities of the firm.
          1. The rights in subsection (1) are without prejudice to A’s other rights.

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