Ohio Code 1776.56 – Dissociated partner’s liability to other persons
(A) A partner‘s dissociation does not of itself discharge the partner’s liability for a partnership obligation incurred before dissociation. A dissociated partner is not liable for a partnership obligation incurred after dissociation, except as otherwise provided in division (B) of this section.
Terms Used In Ohio Code 1776.56
- Business: includes every trade, occupation, and profession. See Ohio Code 1776.01
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Partner: means a person admitted to a partnership as a partner. See Ohio Code 1776.01
- Partnership: means an association of two or more persons to carry on as co-owners a business for-profit formed under section 1776. See Ohio Code 1776.01
- Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
- Person: means an individual, corporation whether nonprofit or for-profit, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision, agency, or instrumentality, or any other legal or commercial entity in its own or any representative capacity, in each case whether domestic or foreign. See Ohio Code 1776.01
- Surviving: means , as applied to an entity, the constituent entity that is specified as the entity into which one or more other constituent entities are to be or have been merged. See Ohio Code 1776.01
(B) A partner who dissociates without resulting in a dissolution and winding up of the partnership business is liable as a partner to the other party in a transaction entered into by the partnership, or a surviving partnership under sections 1776.68 to 1776.79 of the Revised Code, within two years after the partner’s dissociation, only if pursuant to section 1776.36 of the Revised Code the partner would have been liable for the obligation if the transaction had been entered into while the person was a partner and, at the time of entering into the transaction, all of the following were true:
(1) The other party reasonably believed that the dissociated partner was then a partner and reasonably relied on that belief in entering into the transaction.
(2) The other party did not have notice of the partner’s dissociation.
(3) The other party is not deemed to have had knowledge under division (E) of section 1776.33 of the Revised Code or notice under division (C) of section 1776.57 of the Revised Code.
(C) By agreement with the partnership creditor and the partners continuing the business, a dissociated partner may be released from liability for a partnership obligation.
(D) A dissociated partner is released from liability for a partnership obligation if a partnership creditor, with notice of the partner’s dissociation but without the partner’s consent, agrees to a material alteration in the nature or time of payment of a partnership obligation.