5374-S

AN ACT Relating to registered limited liability partnerships; and adding a new chapter to Title 25 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. This chapter may be cited as the registered limited liability partnership act.

NEW SECTION. Sec. 2. Unless the context clearly requires otherwise, the definitions in the section apply through this chapter:

(1) "Court" means every court and judge having jurisdiction in the case;

(2) "Business" means every trade, occupation, or profession;

(3) "Person" means individuals, trustees and personal representatives, partnerships, corporations, and other associations;

(4) "Bankrupt" means bankrupt under the federal bankruptcy act or insolvent under any state insolvent act;

(5) "Conveyance" means every assignment, lease, mortgage, or encumbrance;

(6) "Real property" means land and any interest or estate in land;

(7) "Registered limited liability partnership" or "partnership" means a partnership formed pursuant to an agreement governed by the laws of this state, registered under section 44 of this act and complying with section 45 of this act.

NEW SECTION. Sec. 3. (1) A person has knowledge of a fact within the meaning of this chapter not only when he or she has actual knowledge thereof, but also when he or she has knowledge of such other facts as in the circumstances shows bad faith.

(2) A person has notice of a fact within the meaning of this chapter when the person who claims the benefit of the notice:

(a) States the fact to such person; or

(b) Delivers through the mail, or by other means of communication, a written statement of the fact to such person or to a proper person at his or her place of business or residence.

NEW SECTION. Sec. 4. (1) The rule that statutes in derogation of the common law are to be strictly construed shall have no application to this chapter.

(2) The law of estoppel shall apply under this chapter.

(3) The law of agency shall apply under this chapter.

(4) This chapter shall not be construed so as to impair the obligations of any contract existing when the chapter goes into effect, nor to affect any action or proceedings begun or right accrued before this chapter takes effect.

NEW SECTION. Sec. 5. In any case not provided for in this chapter the rules of law and equity, including the law merchant, shall govern.

NEW SECTION. Sec. 6. (1) A partnership is an association of two or more persons to carry on as co-owners a business for profit and includes, for all purposes of the laws of this state, a registered limited liability partnership.

(2) Any association formed under any other statute of this state, or a statute adopted by any authority, other than the authority of this state, is not a partnership under this chapter, unless such association would have been a partnership in this state prior to the adoption of this chapter.

(3) This chapter shall apply to limited partnerships except insofar as the statutes relating to such partnerships are inconsistent herewith.

NEW SECTION. Sec. 7. In determining whether a partnership exists, these rules shall apply:

(1) Except as provided by section 16 of this act persons who are not partners as to each other, are not partners as to third persons.

(2) Joint tenancy, tenancy in common, tenancy by the entireties, joint property, common property, or part ownership does not of itself establish a partnership, whether such co-owners do or do not share any profits made by the use of the property.

(3) The sharing of gross returns does not of itself establish a partnership, whether or not the persons sharing them have a joint or common right or interest in any property from which the returns are derived.

(4) The receipt by a person of a share of the profits of a business is prima facie evidence that he or she is a partner in the business, but no such inference shall be drawn if such profits were received in payments:

(a) As a debt by installments or otherwise;

(b) As wages of an employee or rent to a landlord;

(d) As interest on a loan, though the amount of payment vary with the profits of the business;

(e) As the consideration for the sale of a good will of a business or other property by installments or otherwise.

NEW SECTION. Sec. 8. (1) All property originally brought into the partnership stock or subsequently acquired by purchase or otherwise, on account of the partnership, is partnership property.

(2) Unless the contrary intention appears, property acquired with partnership funds is partnership property.

(3) Any estate in real property may be acquired in the partnership name. Title so acquired can be conveyed only in the partnership name.

(4) A conveyance to a partnership in the partnership name, though without words of inheritance, passes the entire estate of the grantor unless a contrary intent appears.

NEW SECTION. Sec. 9. (1) Every partner is an agent of the partnership for the purpose of its business, and the act of every partner, including the execution in the partnership name of any instrument, for apparently carrying on in the usual way the business of the partnership of which he or she is a member binds the partnership, unless the partner so acting has in fact no authority to act for the partnership in the particular matter, and the person with whom he or she is dealing has knowledge of the fact that he or she has no such authority.

(2) An act of a partner which is not apparently for the carrying on of the business of the partnership in the usual way does not bind the partnership unless authorized by the other partners.

(3) Unless authorized by the other partners or unless they have abandoned the business, one or more but less than all partners have no authority to:

(a) Assign the partnership property in trust for creditors or on the assignee's promise to pay the debts of the partnership;

(b) Dispose of the good will of the business;

(d) Confess a judgment;

(e) Submit a partnership claim or liability to arbitration or reference.

(4) No act of a partner in contravention of a restriction on authority shall bind the partnership to persons having knowledge of the restriction.

NEW SECTION. Sec. 10. (1) Where title to real property is in the partnership name, any partner may convey title to such property by a conveyance executed in the partnership name; but the partnership may recover such property unless the partner's act binds the partnership under the provisions of section 9(1) of this act, or unless such property has been conveyed by the grantee or a person claiming through such grantee to a holder for value without knowledge that the partner, in making the conveyance, has exceeded his or her authority.

(2) Where title to real property is in the name of the partnership, a conveyance executed by a partner, in his or her own name, passes the equitable interest of the partnership, provided the act is one within the authority of the partner under the provisions of section 9(1) of this act.

(3) Where title to real property is in the name of one or more but not all the partners, and the record does not disclose the right of the partnership, the partners in whose name the title stands may convey title to such property, but the partnership may recover such property if the partners' act does not bind the partnership under the provisions of section 9(1) of this act, unless the purchaser or his or her assignee, is a holder for value, without knowledge.

(4) Where the title to real property is in the name of one or more or all the partners, or in a third person in trust for the partnership, a conveyance executed by a partner in the partnership name, or in his or her own name, passes the equitable interest of the partnership, provided the act is one within the authority of the partner under the provisions of section 9(1) of this act.

(5) Where the title to real property is in the names of all the partners a conveyance executed by all the partners passes all their rights in such property.

NEW SECTION. Sec. 11. An admission or representation made by any partner concerning partnership affairs within the scope of his or her authority as conferred by this chapter is evidence against the partnership.

NEW SECTION. Sec. 12. Notice to any partner of any matter relating to partnership affairs, and the knowledge of the partner acting in the particular matter, acquired while a partner or then present to his or her mind, and the knowledge of any other partner who reasonably could and should have communicated it to the acting partner, operate as notice to or knowledge of the partnership, except in the case of a fraud on the partnership committed by or with the consent of that partner.

NEW SECTION. Sec. 13. Where, by any wrongful act or omission of any partner acting in the ordinary course of the business of the partnership or with the authority of his or her copartners, loss or injury is caused to any person, not being a partner in the partnership, or any penalty is incurred, the partnership is liable therefor to the same extent as the partner so acting or omitting to act.

NEW SECTION. Sec. 14. The partnership is bound to make good the loss:

(1) Where one partner acting within the scope of his or her apparent authority receives money or property of a third person and misapplies it; and

(2) Where the partnership in the course of its business receives money or property of a third person and the money or property so received is misapplied by any partner while it is in the custody of the partnership.

NEW SECTION. Sec. 15. (1) Except as provided in subsection (2) of this section, all partners are liable:

(a) Jointly and severally for everything chargeable to the partnership under sections 13 and 14 of this act; and

(b) Jointly for all other debts and obligations of the partnership; but any partner may enter into a separate obligation to perform a partnership contract;

(i) In no event shall a trustee or personal representative, a fiduciary, acting as a partner have personal liability except as provided in RCW 11.98.110 (2) and (4);

(ii) Any such liability under this section shall be satisfied first from the partnership assets and second from the trust or estate; and

(iii) If a fiduciary is liable, the fiduciary is entitled to indemnification first from the partnership assets and second from the trust or estate.

(2) Subject to subsection (3) of this section, a partner in a registered limited liability partnership is not liable directly or indirectly, including by way of indemnification, contribution, assessment, or otherwise for debts, obligations, and liabilities of or chargeable to the partnership, whether in tort, contract or otherwise, arising from omissions, negligence, wrongful acts, misconduct, or malpractice committed while the partnership is a registered limited liability partnership and in the course of the partnership business by another partner or an employee, agent, or representative of the partnership.

(3) Subsection (2) of this section shall not affect the liability of a partner in a registered limited liability partnership for his or her own omissions, negligence, wrongful acts, misconduct, or malpractice or that of any person under his or her direct supervision and control.

(4) A partner in a registered limited liability partnership is not a proper party to a proceeding by or against a registered limited liability partnership, the object of which is to recover damages or enforce the obligations arising out of the acts, omissions, malpractice, or misconduct of the type described in subsection (2) of this section, unless such partner is personally liable under subsection (3) of this section.

NEW SECTION. Sec. 16. (1) When a person, by words spoken or written or by conduct, represents himself or herself, or consents to another representing him or her to any one, as a partner in an existing partnership or with one or more persons not actual partners, he or she is liable to any such person to whom such representation has been made, who has, on the faith of such representation, given credit to the actual or apparent partnership, and if he or she has made such representation or consented to its being made in a public manner he or she is liable to such person, whether the representation has or has not been made or communicated to such person so giving credit by or with the knowledge of the apparent partner making the representation or consenting to its being made.

(a) When a partnership liability results, he or she is liable as though he or she were an actual member of the partnership.

(b) When no partnership liability results, he or she is liable jointly with the other persons, if any, so consenting to the contract or representation as to incur liability, otherwise separately.

(2) When a person has been thus represented to be a partner in an existing partnership, or with one or more persons not actual partners, he or she is an agent of the persons consenting to such representation to bind them to the same extent and in the same manner as though he or she were a partner in fact, with respect to persons who rely upon the representation. Where all the members of the existing partnership consent to the representation, a partnership act or obligation results; but in all other cases it is the joint act or obligation of the person acting and the persons consenting to the representation.

NEW SECTION. Sec. 17. A person admitted as a partner into an existing partnership is liable for all the obligations of the partnership arising before his or her admission as though he or she had been a partner when such obligations were incurred, except that this liability shall be satisfied only out of the partnership property.

NEW SECTION. Sec. 18. The rights and duties of the partners in relation to the partnership shall be determined, subject to any agreement between them, by the following rules:

(1) Each partner shall be repaid his or her contributions, whether by way of capital or advances to the partnership property and share equally in the profits and surplus remaining after all liabilities, including those to partners, are satisfied; and except as provided in section 15(2) of this act, each partner must contribute toward the losses, whether of capital or otherwise, sustained by the partnership according to his or her share in the profits.

(2) The partnership must indemnify every partner in respect of payments made and personal liabilities reasonably incurred by him or her in the ordinary and proper conduct of its business, or for the preservation of its business or property.

(3) A partner, who in aid of the partnership makes any payment or advance beyond the amount of capital which he or she agreed to contribute, shall be paid interest from the date of the payment or advance.

(4) A partner shall receive interest on the capital contributed by him or her only from the date when repayment should be made.

(5) All partners have equal rights in the management and conduct of the partnership business.

(6) No partner is entitled to remuneration for acting in the partnership business, except that a surviving partner is entitled to reasonable compensation for his or her services in winding up the partnership affairs.

(7) No person can become a member of a partnership without the consent of all the partners.

(8) Any difference arising as to ordinary matters connected with the partnership business may be decided by a majority of the partners; but no act in contravention of any agreement between the partners may be done rightfully without the consent of all the partners.

NEW SECTION. Sec. 19. The partnership books shall be kept, subject to any agreement between the partners, at the principal place of business of the partnership, and every partner shall at all times have access to and may inspect and copy any of them.

NEW SECTION. Sec. 20. Partners shall render on demand true and full information of all things affecting the partnership to any partner or the legal representative of any deceased partner or partner under legal disability.

NEW SECTION. Sec. 21. (1) Every partner must account to the partnership for any benefit, and hold as trustee for it any profits derived by him or her without the consent of the other partners from any transaction connected with the formation, conduct, or liquidation of the partnership or from any use by him or her of its property.

(2) This section applies also to the representatives of a deceased partner engaged in the liquidation of the affairs of the partnership as the personal representatives of the last surviving partner.

NEW SECTION. Sec. 22. Any partner shall have the right to a formal account as to partnership affairs:

(1) If he or she is wrongfully excluded from the partnership business or possession of its property by his or her copartners;

(2) If the right exists under the terms of any agreement;

(3) As provided by section 21 of this act;

(4) Whenever other circumstances render it just and reasonable.

NEW SECTION. Sec. 23. (1) When a partnership for a fixed term or particular undertaking is continued after the termination of such term or particular undertaking without any express agreement, the rights and duties of the partners remain the same as they were at such termination, so far as is consistent with a partnership at will.

(2) A continuation of the business by the partners or such of them as habitually acted therein during the term, without any settlement or liquidation of the partnership affairs, is prima facie evidence of a continuation of the partnership.

NEW SECTION. Sec. 24. The property rights of a partner are: (1) His or her rights in specific partnership property; (2) his or her interest in the partnership; and (3) his or her right to participate in the management.

NEW SECTION. Sec. 25. (1) A partner is co-owner with his or her partners of specific partnership property holding as a tenant in partnership.

(2) The incidents of this tenancy are such that:

(a) A partner, subject to the provisions of this chapter and to any agreement between the partners, has an equal right with his or her partners to possess specific partnership property for partnership purposes; but he or she has no right to possess such property for any other purpose without the consent of his or her partners.

(b) A partner's right in specific partnership property is not assignable except in connection with the assignment of rights of all the partners in the same property.

(c) A partner's right in specific partnership property is not subject to attachment or execution, except on a claim against the partnership. When partnership property is attached for a partnership debt, the partners, or any of them, or the representatives of a deceased partner, cannot claim any right under the homestead or exemption laws.

(d) On the death of a partner, his or her right in specific partnership property vests in the surviving partner or partners, except where the deceased was the last surviving partner, when his or her right in such property vests in his or her legal representative. Such surviving partner or partners, or the legal representative of the last surviving partner, has no right to possess the partnership property for any but a partnership purpose.

(e) A partner's right in specific partnership property is not subject to dower, curtesy, or allowances to a surviving spouse, heirs, or next of kin.

NEW SECTION. Sec. 26. A partner's interest in the partnership is his or her share of the profits and surplus, and the same is personal property.

Sec. 27. RCW 25.04.270 and 1955 c 15 s 25.04.270 are each amended to read as follows:

(1) A conveyance by a partner of his or her interest in the partnership does not of itself dissolve the partnership, nor, as against the other partners in the absence of agreement, entitle the assignees, during the continuance of the partnership, to interfere in the management or administration of the partnership business or affairs, or to require any information or account of partnership transactions, or to inspect the partnership books; but it merely entitles the assignee to receive in accordance with his or her contract the profits to which the assigning partner would otherwise be entitled.

(2) In case of a dissolution of the partnership, the assignee is entitled to receive his or her assignor's interest and may require an account from the date only of the last account agreed to by all the partners.

NEW SECTION. Sec. 28. (1) On due application to a competent court by any judgment creditor of a partner, the court which entered the judgment, order, or decree, or any other court, may charge the interest of the debtor partner with payment of the unsatisfied amount of such judgment debt with interest thereon; and may then or later appoint a receiver of his or her share of the profits, and of any other money due or to fall due to him or her in respect of the partnership, and make all other orders, directions, accounts and inquiries which the debtor partner might have made, or which the circumstances of the case may require.

(2) The interest charged may be redeemed at any time before foreclosure, or in case of a sale being directed by the court may be purchased without thereby causing a dissolution:

(a) With separate property, by any one or more of the partners; or

(b) With partnership property, by any one or more of the partners with the consent of all the partners whose interests are not so charged or sold.

(3) Nothing in this chapter shall be held to deprive a partner of his or her right, if any, under the exemption laws, as regards his or her interest in the partnership.

NEW SECTION. Sec. 29. The dissolution of a partnership is the change in the relation of the partners caused by any partner ceasing to be associated in the carrying on as distinguished from winding up of the business.

NEW SECTION. Sec. 30. On dissolution the partnership is not terminated, but continues until the winding up of partnership affairs is completed.

NEW SECTION. Sec. 31. Dissolution is caused:

(1) Without violation of the agreement between the partners;

(a) By the termination of the definite term or particular undertaking specified in the agreement;

(b) By the express will of any partner when no definite term or particular undertaking is specified;

(c) By the express will of all the partners who have not assigned their interests or suffered them to be charged for their separate debts, either before or after the termination of any specified term or particular undertaking;

(d) By the expulsion of any partner from the business bona fide in accordance with such a power conferred by the agreement between the partners;

(2) In contravention of the agreement between the partners, where the circumstances do not permit a dissolution under any other provision of this section, by the express will of any partner at any time;

(3) By any event which makes it unlawful for the business of the partnership to be carried on or for the members to carry it on in partnership;

(4) By the death of any partner;

(5) By the bankruptcy of any partner of the partnership; or

(6) By decree of court under section 32 of this act.

NEW SECTION. Sec. 32. (1) On application by or for a partner the court shall decree a dissolution whenever:

(a) A partner has been declared a lunatic in any judicial proceeding or is shown to be of unsound mind;

(b) A partner becomes in any other way incapable of performing his or her part of the partnership contract;

(d) A partner wilfully or persistently commits a breach of the partnership agreement, or otherwise so conducts himself or herself in matters relating to the partnership business that it is not reasonably practicable to carry on the business in partnership with him or her;

(e) The business of the partnership can only be carried on at a loss;

(f) Other circumstances render dissolution equitable.

(2) On the application of the purchaser of a partner's interest under sections 27 and 28 of this act:

(a) After the termination of the specified term or particular undertaking,

(b) At any time if the partnership was a partnership at will when the interest was assigned or when the charging order was issued.

NEW SECTION. Sec. 33. Except so far as may be necessary to wind up partnership affairs or to complete transactions begun but not then finished, dissolution terminates all authority of any partner to act for the partnership,

(1) With respect to the partners,

(a) When the dissolution is not by the act, bankruptcy or death of a partner; or

(b) When the dissolution is by such act, bankruptcy or death of a partner, in cases where section 34 of this act so requires.

(2) With respect to persons not partners, as declared in section 35 of this act.

NEW SECTION. Sec. 34. Where the dissolution is caused by the act, death or bankruptcy of a partner, each partner is liable to his or her copartners for his or her share of any liability created by any partner acting for the partnership as if the partnership had not been dissolved unless:

(1) The dissolution being by act of any partner, the partner acting for the partnership had knowledge of the dissolution; or

(2) The dissolution being by the death or bankruptcy of a partner, the partner acting for the partnership had knowledge or notice of the death or bankruptcy; or

(3) The liability is for a debt, obligation, or liability for which the partner is not liable as provided in section 15(2) of this act.

NEW SECTION. Sec. 35. (1) After dissolution a partner can bind the partnership except as provided in subsection (3) of this section:

(a) By any act appropriate for winding up partnership affairs or completing transactions unfinished at dissolution;

(b) By any transaction which would bind the partnership if dissolution had not taken place, provided the other party to the transaction:

(i) Had extended credit to the partnership prior to dissolution and had no knowledge or notice of the dissolution; or

(ii) Though he or she had not so extended credit, had nevertheless known of the partnership prior to dissolution, and, having no knowledge or notice of dissolution, the fact of dissolution had not been advertised in a newspaper of general circulation in the place, or in each place if more than one, at which the partnership business was regularly carried on.

(2) The liability of a partner under subsection (1)(b) of this section shall be satisfied out of partnership assets alone when such partner had been prior to dissolution:

(a) Unknown as a partner to the person with whom the contract is made; and

(b) So far unknown and inactive in partnership affairs that the business reputation of the partnership could not be said to have been in any degree due to his or her connection with it.

(3) The partnership is in no case bound by any act of a partner after dissolution:

(a) Where the partnership is dissolved because it is unlawful to carry on the business, unless the act is appropriate for winding up partnership affairs; or

(b) Where the partner has become bankrupt; or

(i) Had extended credit to the partnership prior to dissolution and had no knowledge or notice of his or her want of authority; or

(ii) Had not extended credit to the partnership prior to dissolution, and, having no knowledge or notice of his or her want of authority, the fact of his or her want of authority has not been advertised in the manner provided for advertising the fact of dissolution in subsection (1)(b)(ii) of this section.

(4) Nothing in this section shall affect the liability under section 16 of this act of any person who after dissolution represents himself or herself or consents to another representing him or her as a partner in a partnership engaged in carrying on business.

NEW SECTION. Sec. 36. (1) The dissolution of the partnership does not of itself discharge the existing liability of any partner.

(2) A partner is discharged from any existing liability upon dissolution of the partnership by an agreement to that effect between himself or herself, the partnership creditor and the person or partnership continuing the business; and such agreement may be inferred from the course of dealing between the creditor having knowledge of the dissolution and the person or partnership continuing the business.

(3) Where a person agrees to assume the existing obligations of a dissolved partnership, the partners whose obligations have been assumed shall be discharged from any liability to any creditor of the partnership who, knowing of the agreement, consents to a material alteration in the nature or time of payment of such obligations.

(4) The individual property of a deceased partner shall be liable for those obligations of the partnership incurred while he or she was a partner and for which he or she was liable under section 15 of this act, but subject to the prior payment of his or her separate debts.

NEW SECTION. Sec. 37. Unless otherwise agreed, the partners who have not wrongfully dissolved the partnership or the legal representative of the last surviving partner, not bankrupt, have the right to wind up the partnership affairs: PROVIDED, HOWEVER, That any partner, his or her legal representative, or his or her assignee, upon cause shown, may obtain winding up by the court.

NEW SECTION. Sec. 38. (1) When dissolution is caused in any way, except in contravention of the partnership agreement, each partner, as against his or her copartners and all persons claiming through them in respect of their interests in the partnership, unless otherwise agreed, may have the partnership property applied to discharge its liabilities, and the surplus applied to pay in cash the net amount owing to the respective partners. But if dissolution is caused by expulsion of a partner, bona fide under the partnership agreement and if the expelled partner is discharged from all partnership liabilities, either by payment or agreement under section 36(2) of this act, he or she shall receive in cash only the net amount due him or her from the partnership.

(2) When dissolution is caused in contravention of the partnership agreement the rights of the partners shall be as follows:

(a) Each partner who has not caused dissolution wrongfully shall have:

(i) All the rights specified in subsection (1) of this section; and

(ii) The right, as against each partner who has caused the dissolution wrongfully, to damages for breach of the agreement.

(b) The partners who have not caused the dissolution wrongfully, if they all desire to continue the business in the same name, either by themselves or jointly with others, may do so, during the agreed term for the partnership and for that purpose may possess the partnership property provided they secure the payment by bond approved by the court, or pay to any partner who has caused the dissolution wrongfully, the value of his or her interest in the partnership at the dissolution, less any damages recoverable under (a)(ii) of this subsection, and in like manner indemnify him or her against all present or future partnership liabilities.

(i) If the business is not continued under the provisions of (b) of this subsection all the rights of a partner under subsection (1) of this section, subject to (a)(ii) of this subsection;

(ii) If the business is continued under (b) of this subsection the right as against his or her copartners and all claiming through them in respect of their interests in the partnership, to have the value of his or her interests in the partnership, less any damages caused to his or her copartners by the dissolution, ascertained and paid to him or her in cash, or the payment secured by bond approved by the court, and to be released from all existing liabilities of the partnership; but in ascertaining the value of the partner's interest the value of the good will of the business shall not be considered.

NEW SECTION. Sec. 39. Where a partnership contract is rescinded on the ground of the fraud or misrepresentation of one of the parties thereto, the party entitled to rescind is, without prejudice to any other right, entitled,

(1) To a lien on, or right of retention of, the surplus of the partnership property after satisfying the partnership liabilities to third persons for any sum of money paid by him or her for the purchase of an interest in the partnership and for any capital or advances contributed by him or her; and

(2) To stand, after all liabilities to third persons have been satisfied, in the place of the creditors of the partnership for any payments made by him or her in respect of the partnership liabilities; and

(3) To be indemnified by the person guilty of the fraud or making the representation against all debts and liabilities of the partnership.

NEW SECTION. Sec. 40. In settling accounts between the partners after dissolution, the following rules shall be observed, subject to any agreement to the contrary:

(1) The assets of the partnership are:

(a) The partnership property;

(b) The contributions of the partners specified in subsection (4) of this section.

(2) The liabilities of the partnership shall rank in order of payment, as follows:

(a) Those owing to creditors other than partners;

(b) Those owing to partners other than for capital and profits;

(d) Those owing to partners in respect of profits.

(3) The assets shall be applied in the order of their declaration in subdivision (1) of this section to the satisfaction of the liabilities.

(4) Except as provided in section 15(2)(a) of this act, the partners shall contribute, as provided by section 18(1) of this act the amount necessary to satisfy the liabilities; and (b) if any, but not all, of the partners are insolvent, or, not being subject to process, refuse to contribute, the other partners shall contribute their share of the liabilities, and, in the relative proportions in which they share the profits, the additional amount necessary to pay the liabilities.

(5) An assignee for the benefit of creditors or any person appointed by the court shall have the right to enforce the contribution specified in subdivision (4) of this section.

(6) Any partner or his or her legal representative shall have the right to enforce the contributions specified in subdivision (4) of this section, to the extent of the amount which he or she has paid in excess of his or her share of the liability.

(7) The individual property of a deceased partner shall be liable for the contributions specified in subdivision (4) of this section.

(8) When partnership property and the individual properties of the partners are in possession of a court for distribution, partnership creditors shall have priority on partnership property and separate creditors on individual property, saving the rights of lien or secured creditors as heretofore.

(9) Where a partner has become bankrupt or his or her estate is insolvent the claims against his or her separate property shall rank in the following order:

(a) Those owing to separate creditors;

(b) Those owing to partnership creditors;

NEW SECTION. Sec. 41. (1) When any new partner is admitted into an existing partnership, or when any partner retires and assigns, or the representative of the deceased partner assigns, his or her rights in partnership property to two or more of the partners, or to one or more of the partners and one or more third persons, if the business is continued without liquidation of the partnership affairs, creditors of the first or dissolved partnership are also creditors of the partnership so continuing the business.

(2) When all but one partner retire and assign, or the representative of a deceased partner assigns, their rights in partnership property to the remaining partner, who continues the business without liquidation of partnership affairs, either alone or with others, creditors of the dissolved partnership are also creditors of the person or partnership so continuing the business.

(3) When any partner retires or dies and the business of the dissolved partnership is continued as set forth in subsections (1) and (2) of this section, with the consent of the retired partners or the representative of the deceased partner, but without any assignment of his or her right in partnership property, rights of creditors of the dissolved partnership and of the creditors of the person or partnership continuing the business shall be as if such assignment had been made.

(4) When all the partners or their representatives assign their rights in partnership property to one or more third persons who promise to pay the debts and who continue the business of the dissolved partnership, creditors of the dissolved partnership are also creditors of the person or partnership continuing the business.

(5) When any partner wrongfully causes a dissolution and the remaining partners continue the business under the provisions of section 38(2)(b) of this act, either alone or with others, and without liquidation of the partnership affairs, creditors of the dissolved partnership are also creditors of the person or partnership continuing the business.

(6) When a partner is expelled and the remaining partners continue the business either alone or with others, without liquidation of the partnership affairs, creditors of the dissolved partnership are also creditors of the person or partnership continuing the business.

(7) The liability of a third person becoming a partner in the partnership continuing the business, under this section, to the creditors of the dissolved partnership shall be satisfied out of partnership property only.

(8) When the business of a partnership after dissolution is continued under any conditions set forth in this section the creditors of the dissolved partnership, as against the separate creditors of the retiring or deceased partner or the representative of the deceased partner, have a prior right to any claim of the retired partner or the representative of the deceased partner against the person or partnership continuing the business, on account of the retired or deceased partner's interest in the dissolved partnership or on account of any consideration promised for such interest or for his or her right in partnership property.

(9) Nothing in this section shall be held to modify any right of creditors to set aside any assignment on the ground of fraud.

(10) The use by the person or partnership continuing the business of the partnership name, or the name of a deceased partner as part thereof, shall not of itself make the individual property of the deceased partner liable for any debts contracted by such person or partnership.

NEW SECTION. Sec. 42. When any partner retires or dies, and the business is continued under any of the conditions set forth in section 41 (1), (2), (3), (5), (6), or 38(2)(b) of this act, without any settlement of accounts as between the partner's estate and the person or partnership continuing the business, unless otherwise agreed, the partner's legal representative as against such persons or partnerships may have the value of his or her interest at the date of dissolution ascertained, and shall receive as an ordinary creditor an amount equal to the value of his or her interest in the dissolved partnership with interest, or, at his or her option or at the option of his or her legal representative, in lieu of interest, the profits attributable to the use of his or her right in the property of the dissolved partnership: PROVIDED, That the creditors of the dissolved partnership as against the separate creditors, or the representative of the retired or deceased partner, shall have priority on any claim arising under this section as provided by section 41(8) of this act.

NEW SECTION. Sec. 43. The right to an account of his or her interest shall accrue to any partner, or his or her legal representative, as against the winding up partners or the surviving partners or the person or partnership continuing the business, at the date of dissolution, in the absence of any agreement to the contrary.

NEW SECTION. Sec. 44. (1) To become and to continue as a registered limited liability partnership, a partnership shall file with the secretary of state an application stating the name of the partnership; the address of its principal office; if the partnership's principal office is not located in this state, the address of a registered office and the name and address of a registered agent for service of process in this state which the partnership will be required to maintain; the number of partners; a brief statement of the business in which the partnership engages; any other matters that the partnership determines to include; and that the partnership thereby applies for status as a registered limited liability partnership.

(2) The application shall be executed by a majority in interest of the partners or by one or more partners authorized to execute an application.

(3) The application shall be accompanied by a fee of one hundred seventy-five dollars for each partnership.

(4) The secretary of state shall register as a registered limited liability partnership any partnership that submits a completed application with the required fee.

(5) A partnership registered under this section shall pay an annual fee, in each year following the year in which its application is filed, on a date and in an amount specified by the secretary of state. The fee must be accompanied by a notice, on a form provided by the secretary of state, of the number of partners currently in the partnership and of any material changes in the information contained in the partnership's application for registration.

(6) Registration is effective immediately after the date an application is filed, and remains effective until: (a) It is voluntarily withdrawn by filing with the secretary of state a written withdrawal notice executed by a majority in interest of the partners or by one or more partners authorized to execute a withdrawal notice; or (b) thirty days after receipt by the partnership of a notice from the secretary of state, which notice shall be sent by certified mail, return receipt requested, that the partnership has failed to make timely payment of the annual fee specified in subsection (5) of this section, unless the fee is paid within such a thirty-day period.

(7) The status of a partnership as a registered limited liability partnership, and the liability of the partners thereof, shall not be affected by: (a) Errors in the information stated in an application under subsection (1) of this section or a notice under subsection (5) of this section; or (b) changes after the filing of such an application or notice in the information stated in the application or notice.

(8) The secretary of state may provide forms for the application under subsection (1) of this section or a notice under subsection (5) of this section.

NEW SECTION. Sec. 45. The name of a registered limited liability partnership shall contain the words "registered limited liability partnership" or the abbreviation "L.L.P." or "LLP"; or "registered limited liability partnership" or the abbreviation "L.L.P." or "LLP" as the last words or letters of its name.

NEW SECTION. Sec. 46. (1) A partnership, including a registered limited liability partnership, formed pursuant to an agreement and governed by this chapter, may conduct its business, carry on its operations, and have and exercise the powers granted by this chapter in any state, territory, district, or possession of the United States or in any foreign country.

(2) It is the intent of the legislature that the legal existence of registered limited liability partnerships formed pursuant to an agreement and governed by this chapter be recognized outside the boundaries of this state and that the laws of this state governing such registered limited liability partnerships transacting business outside this state be granted the protection of full faith and credit under the Constitution of the United States.

(3) The internal affairs of a partnership, including registered limited liability partnerships, formed pursuant to an agreement and governed by this chapter, including the liability of partners for debts, obligations, and liabilities of or chargeable to the partnership, shall be subject to and governed by the laws of this state.

(4) Subject to any statutes for the regulation and control of specific types of businesses, foreign registered limited liability partnerships, existing pursuant to the laws of another jurisdiction, may do business in this state and are not required to register with the secretary of state under this chapter.

(5) It is the policy of this state that the internal affairs, including the liability of partners for debts, obligations, and liabilities of or chargeable to partnerships, of partnerships, including foreign registered limited liability partnerships, shall be subject to and governed by the laws of such other jurisdiction. However, a foreign registered limited liability partnership is subject to section 47 of this act if it renders professional services in this state.

NEW SECTION. Sec. 47. If the registered limited liability partnership fails to maintain for itself and for its members practicing in this state a policy of professional liability insurance, bond, or other evidence of financial responsibility of a kind designated by rule by the state insurance commissioner and in the amount of at least one million dollars in aggregate coverage for the policy year, then the registered limited liability partnership's members shall be personally liable to the extent that, had such insurance, bond, or other evidence of responsibility been maintained, it would have covered the liability in question.

NEW SECTION. Sec. 48. Sections 1 through 47 of this act constitute a new chapter on Title 25 RCW.