N.D. Cent. Code § 45-19-01 (701) Purchase of dissociated partner's interest
45-19-01. (701) Purchase of dissociated partner's interest
1. If a partner is dissociated from a partnership without resulting in a dissolution and
winding up of the partnership business under section 45-20-01, the partnership shall
cause the dissociated partner's interest in the partnership to be purchased for a buyout
price determined pursuant to subsection 2.
2. The buyout price of a dissociated partner's interest is the amount that would have
been distributable to the dissociating partner under subsection 2 of section 45-20-07 if,
on the date of dissociation, the assets of the partnership were sold at a price equal to
the greater of the liquidation value or the value based on a sale of the entire business
as a going concern without the dissociated partner and the partnership were wound up
as of that date. Interest must be paid from the date of dissociation to the date of
payment.
3. Damages for wrongful dissociation under subsection 2 of section 45-18-02, and all
other amounts owing, whether or not presently due, from the dissociated partner to the
partnership, must be offset against the buyout price. Interest must be paid from the
date the amount owed becomes due to the date of payment.
4. A partnership shall indemnify a dissociated partner whose interest is being purchased
against all partnership liabilities, whether incurred before or after the dissociation,
except liabilities incurred by an act of the dissociated partner under section 45-19-02.
5. If no agreement for the purchase of a dissociated partner's interest is reached within
one hundred twenty days after a written demand for payment, the partnership shall
pay, or cause to be paid, in cash to the dissociated partner the amount the partnership
estimates to be the buyout price and accrued interest, reduced by any offsets and
accrued interest under subsection 3.
6. If a deferred payment is authorized under subsection 8, the partnership may tender a
written offer to pay the amount it estimates to be the buyout price and accrued interest,
reduced by any offsets under subsection 3, stating the time of payment, the amount
and type of security for payment, and the other terms and conditions of the obligation.
7. The payment or tender required by subsection 5 or 6 must be accompanied by the
following:
a. A statement of partnership assets and liabilities as of the date of dissociation;
b. The latest available partnership balance sheet and income statement, if any;
c. An explanation of how the estimated amount of the payment was calculated; and
d. Written notice that the payment is in full satisfaction of the obligation to purchase
unless, within one hundred twenty days after the written notice, the dissociated
partner commences an action to determine the buyout price, any offsets under
subsection 3, or other terms of the obligation to purchase.
8. A partner who wrongfully dissociates before the expiration of a definite term or the
completion of a particular undertaking is not entitled to payment of any portion of the
buyout price until the expiration of the term or completion of the undertaking, unless
the partner establishes to the satisfaction of the court that earlier payment will not
cause undue hardship to the business of the partnership. A deferred payment must be
adequately secured and bear interest.
9. A dissociated partner may maintain an action against the partnership, pursuant to
paragraph 2 of subdivision b of subsection 2 of section 45-16-05, to determine the
buyout price of that partner's interest, any offsets under subsection 3, or other terms of
the obligation to purchase. The action must be commenced within one hundred twenty
days after the partnership has tendered payment or an offer to pay or within one year
after written demand for payment if no payment or offer to pay is tendered. The court
shall determine the buyout price of the dissociated partner's interest, any offset due
under subsection 3, and accrued interest, and enter judgment for any additional
payment or refund. If deferred payment is authorized under subsection 8, the court
shall also determine the security for payment and other terms of the obligation to
purchase. The court may assess reasonable attorney's fees and the fees and
expenses of appraisers or other experts for a party to the action, in amounts the court
finds equitable, against a party that the court finds acted arbitrarily, vexatiously, or not
in good faith. The finding may be based on the partnership's failure to tender payment
or an offer to pay or to comply with subsection 7.