N.J. Stat. tit. 42, ch. 5

N.J. Stat. tit. 42, ch. 5
in effect

N.J. Stat. § 42:5-1 § 42:5-1

Whenever any partnership has been or shall be dissolved by mutual consent or otherwise, any partner may make a separate composition or compromise with any one or all of the creditors of such partnership, and such composition or compromise shall be a full discharge to the partner making the same, and to him only, of and from all liability, incurred by reason of his connection with the partnership, to the creditors with whom the compromise is made.

N.J. Stat. § 42:5-2 § 42:5-2

Every partner making a composition or compromise under authority of section 42:5-1 of this title shall take from the creditors with whom he may make the same, a note or memorandum, in writing, exonerating him from any individual liability incurred by reason of his connection with such partnership, which note or memorandum may be pleaded in bar of the creditors' rights of recovery against him.

N.J. Stat. § 42:5-3 § 42:5-3

If the individual liability of a partner is upon a judgment of any court of record in this state, the clerk of such court shall, upon the filing with him of the note or memorandum mentioned in section 42:5-2 of this title, acknowledged by the parties making it as satisfactions of judgments are required to be acknowledged, discharge such judgment of record in so far as the compromising partner is concerned, and the ratable portion of the partner so released shall be credited as a payment on account of the judgment.

N.J. Stat. § 42:5-4 Compromise with one partner not to discharge copartners; effect on rights between creditors and copartners

1. A compromise or composition with individual members of a partnership shall not: a. Discharge the other copartners; b. Impair the right of any creditor to proceed at law or in equity against such copartners who have not been discharged for the balance of said partnership debt after the ratable portion of said debtor so released shall have been deducted therefrom. 2. No such compromise or composition shall prevent any member of the partnership not discharged thereby from: a. Using as a set-off any demand against such creditors which could have been set off had suit been brought against all the individuals composing such firm; b. Availing himself of any defense at law or in equity, except that he shall not set up the discharge of one individual as a discharge of the other copartners other than to the extent of the ratable portion of such discharged individual, unless it shall appear that all were intended to be so discharged.

N.J. Stat. § 42:5-5 § 42:5-5

No compromise or composition of an individual partner with a creditor of such partnership shall in any way affect the right of the other copartners to call on such individual for his ratable portion of such partnership debt.
Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://www.njleg.state.nj.us/legislative-activity/statutesFetched: 10/17/2026

Starting a business in New Jersey? New Jersey LLC guide: costs and requirements