Distinguish a dissociation from a dissolution. Explain the effect of each
Under the RUPA, dissociation occurs when a partner ceases to be associated in carrying on of the business. Dissolution refers to those situations when the RUPA requires a partnership to wind up and terminate. The UPA uses the term "dissolution" to denote the change in the relationship caused by a partner's ceasing to be associated in carrying on of the business.
Under the RUPA, the effect of a dissociation is to terminate the partner's right to participate in the management and conduct of the partnership business. The duty not to compete also terminates upon dissociation. Only a limited subset of dissociations require the dissolution of a partnership under the Revised Act. A partnership continues after dissolution only to wind up its business. Upon dissolution, the actual authority of a partner to act for the partnership terminates, except as necessary to wind up the business. Partners are liable for their share of partnership liabilities incurred after dissolution.
The effect of a dissolution under the UPA is to terminate actual authority of a partner to act for the partnership, except to wind up the business. Apparent authority continues unless the third party is given notice of the dissolution. On dissolution, the partnership is not terminated but continues until the winding up of its affairs is complete. Dissolution does not discharge the existing liability of any partner.
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What will be an ideal response?
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It is important to perform a problem audit because ________
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