SECTIONS 16401-16406 - California Statutes

CORPORATIONS CODE

SECTION 16401-16406

16401. (a) Each partner is deemed to have an account that is
subject to both of the following:
(1) Credited with an amount equal to the money plus the value of
any other property, net of the amount of any liabilities, the partner
contributes to the partnership and the partner's share of the
partnership profits.
(2) Subject to Sections 16306 and 16957, charged with an amount
equal to the money plus the value of any other property, net of the
amount of any liabilities, distributed by the partnership to the
partner and the partner's share of the partnership losses.
(b) Each partner is entitled to an equal share of the partnership
profits and, subject to Sections 16306 and 16957, is chargeable with
a share of the partnership losses in proportion to the partner's
share of the profits.
(c) A partnership shall reimburse a partner for payments made and
indemnify a partner for liabilities incurred by the partner in the
ordinary course of the business of the partnership or for the
preservation of its business or property.
(d) A partnership shall reimburse a partner for an advance to the
partnership beyond the amount of capital the partner agreed to
contribute.
(e) A payment or advance made by a partner that gives rise to a
partnership obligation under subdivision (c) or (d) constitutes a
loan to the partnership that accrues interest from the date of the
payment or advance.
(f) Each partner has equal rights in the management and conduct of
the partnership business.
(g) A partner may use or possess partnership property only on
behalf of the partnership.
(h) A partner is not entitled to remuneration for services
performed for the partnership, except for reasonable compensation for
services rendered in winding up the business of the partnership.
(i) A person may become a partner only with the consent of all of
the partners.
(j) A difference arising as to a matter in the ordinary course of
business of a partnership may be decided by a majority of the
partners. An act outside the ordinary course of business of a
partnership and an amendment to the partnership agreement may be
undertaken only with the consent of all of the partners.
(k) This section does not affect the obligations of a partnership
to other persons under Section 16301.

16402. A partner has no right to receive, and may not be required
to accept, a distribution in kind.

16403. (a) A partnership shall keep its books and records, if any,
in writing or in any other form capable of being converted into
clearly legible tangible form, at its chief executive office.
(b) A partnership shall provide partners and their agents and
attorneys access to its books and records. It shall provide former
partners and their agents and attorneys access to books and records
pertaining to the period during which they were partners. The right
of access provides the opportunity to inspect and copy books and
records during ordinary business hours. A partnership may impose a
reasonable charge, covering the costs of labor and material, for
copies of documents furnished.
(c) Each partner and the partnership shall furnish to a partner,
and to the legal representative of a deceased partner or partner
under legal disability, both of the following, which may be
transmitted by electronic transmission by the partnership
(subdivision (4) of Section 16101):
(1) Without demand, any information concerning the partnership's
business and affairs reasonably required for the proper exercise of
the partner's rights and duties under the partnership agreement or
this chapter; and
(2) On demand, any other information concerning the partnership's
business and affairs, except to the extent the demand or the
information demanded is unreasonable or otherwise improper under the
circumstances.

16404. (a) The fiduciary duties a partner owes to the partnership
and the other partners are the duty of loyalty and the duty of care
set forth in subdivisions (b) and (c).
(b) A partner's duty of loyalty to the partnership and the other
partners includes all of the following:
(1) To account to the partnership and hold as trustee for it any
property, profit, or benefit derived by the partner in the conduct
and winding up of the partnership business or derived from a use by
the partner of partnership property or information, including the
appropriation of a partnership opportunity.
(2) To refrain from dealing with the partnership in the conduct or
winding up of the partnership business as or on behalf of a party
having an interest adverse to the partnership.
(3) To refrain from competing with the partnership in the conduct
of the partnership business before the dissolution of the
partnership.
(c) A partner's duty of care to the partnership and the other
partners in the conduct and winding up of the partnership business is
limited to refraining from engaging in grossly negligent or reckless
conduct, intentional misconduct, or a knowing violation of law.
(d) A partner shall discharge the duties to the partnership and
the other partners under this chapter or under the partnership
agreement and exercise any rights consistently with the obligation of
good faith and fair dealing.
(e) A partner does not violate a duty or obligation under this
chapter or under the partnership agreement merely because the partner'
s conduct furthers the partner's own interest.
(f) A partner may lend money to and transact other business with
the partnership, and as to each loan or transaction, the rights and
obligations of the partner regarding performance or enforcement are
the same as those of a person who is not a partner, subject to other
applicable law.
(g) This section applies to a person winding up the partnership
business as the personal or legal representative of the last
surviving partner as if the person were a partner.

16405. (a) A partnership may maintain an action against a partner
for a breach of the partnership agreement, or for the violation of a
duty to the partnership, causing harm to the partnership.
(b) A partner may maintain an action against the partnership or
another partner for legal or equitable relief, with or without an
accounting as to partnership business, to do any of the following:
(1) Enforce the partner's rights under the partnership agreement.
(2) Enforce the partner's rights under this chapter, including all
of the following:
(A) The partner's rights under Section 16401, 16403, or 16404.
(B) The partner's right on dissociation to have the partner's
interest in the partnership purchased pursuant to Section 16701 or
16701.5, or to enforce any other right under Article 6 (commencing
with Section 16601) or 7 (commencing with Section 16701).
(C) The partner's right to compel a dissolution and winding up of
the partnership business under Section 16801 or enforce any other
right under Article 8 (commencing with Section 16801).
(3) Enforce the rights and otherwise protect the interests of the
partner, including rights and interests arising independently of the
partnership relationship.
(c) The accrual of, and any time limitation on, a right of action
for a remedy under this section is governed by other law. A right to
an accounting upon a dissolution and winding up does not revive a
claim barred by law.

16406. (a) If a partnership for a definite term or particular
undertaking is continued, without an express agreement, after the
expiration of the term or completion of the undertaking, the rights
and duties of the partners remain the same as they were at the
expiration or completion, so far as is consistent with a partnership
at will.
(b) If the partners, or those of them who habitually acted in the
business during the term or undertaking, continue the business
without any settlement or liquidation of the partnership, they are
presumed to have agreed that the partnership will continue.