# Title 45 — Partnerships

## Chapter 45-16 — Relations of Partners to Each Other and to Partnership

### § 45-16-01. (401) Partner's rights and duties.

1. Each partner is deemed to have an account that is:
a. 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; and
b. 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.
2. Each partner is entitled to an equal share of the partnership profits and is chargeable
with a share of the partnership losses in proportion to the partner's share of the profits.
3. 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.
4. A partnership shall reimburse a partner for an advance to the partnership beyond the
amount of capital the partner agreed to contribute.
5. A payment or advance made by a partner which gives rise to a partnership obligation
under subsection 3 or 4 constitutes a loan to the partnership which accrues interest
from the date of the payment or advance.
6. Each partner has equal rights in the management and conduct of the partnership
business.
7. A partner may use or possess partnership property only on behalf of the partnership.
8. 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.
9. A person may become a partner only with the consent of all of the partners.
10. 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.
11. This section does not affect the obligations of a partnership to other persons under
section 45-15-01.
### § 45-16-02. (402) Distributions in kind.

A partner has no right to receive, and may not be required to accept, a distribution in kind.
### § 45-16-03. (403) Partner's rights and duties with respect to information.

1. A partnership shall keep its books and records, if any, at its chief executive office.
2. 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.
3. Each partner and the partnership shall furnish to a partner, and to the legal
representative of a deceased partner or partner under legal disability:
a. 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 chapters 45-13 through 45-21; and
b. 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.

### § 45-16-04. (404) General standards of partner's conduct.

1. The only 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 subsections 2 and 3.
2. A partner's duty of loyalty to the partnership and the other partners is limited to the
following:
a. 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, including
the appropriation of a partnership opportunity;
b. 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; and
c. To refrain from competing with the partnership in the conduct of the partnership
business before the dissolution of the partnership.
3. 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.
4. A partner shall discharge the duties to the partnership and the other partners under
chapters 45-13 through 45-21 or under the partnership agreement and exercise any
rights consistently with the obligation of good faith and fair dealing.
5. A partner does not violate a duty or obligation under chapters 45-13 through 45-21 or
under the partnership agreement merely because the partner's conduct furthers the
partner's own interest.
6. 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 are the same as
those of a person who is not a partner, subject to other applicable law.
7. 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.
### § 45-16-05. (405) Actions by partnership and partners.

1. 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.
2. 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:
a. Enforce the partner's rights under the partnership agreement;
b. Enforce the partner's rights under chapters 45-13 through 45-21, including:
(1) The partner's rights under section 45-16-01, 45-16-03, or 45-16-04;
(2) The partner's right on dissociation to have the partner's interest in the
partnership purchased pursuant to section 45-19-01 or enforce any other
right under chapter 45-18 or 45-19; or
(3) The partner's right to compel a dissolution and winding up of the partnership
business under section 45-20-01 or enforce any other right under chapter
45-20; or
c. Enforce the rights and otherwise protect the interests of the partner, including
rights and interests arising independently of the partnership relationship.
3. 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.
### § 45-16-06. (406) Continuation of partnership beyond definite term or particular

undertaking.
1. 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.

2. 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.
### § 45-16-07. Action without a meeting.

An action required or permitted to be taken at a meeting of the partners may be taken
without a meeting by written action signed, or consented to by authenticated electronic
communication, by all of the partners entitled to vote on the action.
1. If the partnership agreement so provides, any action may be taken by written action
signed by the partners who own voting power equal to the voting power that would be
required to take the same action at a meeting of the partners at which all partners
were present.
a. When written action is permitted to be taken by less than all partners, all partners
must be notified immediately of its text and effective date.
b. Failure to provide the notice does not invalidate the written action.
c. A partner who does not sign or consent to the written action has no liability for the
action or actions taken by the written actions.
2. The written action is effective when it has been signed, or consented to by
authenticated electronic communication, by the required partners, unless a different
effective time is provided in the written action.
3. When this chapter requires or permits a certificate concerning an action to be filed with
the secretary of state, the partner signing the certificate must so indicate if the action
was taken under this section.
### § 45-16-08. Remote communications for partner meetings.

1. This section shall be construed and applied to:
a. Facilitate remote communication consistent with other applicable law; and
b. Be consistent with reasonable practices concerning remote communication and
with the continued expansion of those practices.
2. To the extent authorized in the partnership agreement:
a. A meeting of the partners may be held solely by any combination of means of
remote communication through which the participants may participate in the
meeting:
(1) If the notice of the meeting is given to every partner entitled to vote; and
(2) If the partnership interests held by the partners participating in the meeting
would be sufficient to constitute a quorum at a meeting.
b. A partner not physically present at a meeting of partners may by means of remote
communication participate in a meeting of partners held at a designated place.
3. In any meeting of partners held solely by means of remote communication under
subdivision a of subsection 2, or in any meeting partners held at a designated place in
which one or more partners participate by means of remote communication under
subdivision b of subsection 2:
a. The partnership shall implement reasonable measures:
(1) To verify that each person deemed present and entitled to vote at the
meeting by means of remote communication is a partner; and
(2) To provide each partner participating by means of remote communication
with a reasonable opportunity to participate in the meeting, including an
opportunity to:
(a) Read or hear the proceedings of the meeting substantially
concurrently with those proceedings;
(b) If allowed by the procedures governing the meeting, have the
partner's remarks heard or read by other participants in the meeting
substantially concurrently with the making of those remarks; and
(c) If otherwise entitled, vote on matters submitted to the partners.
b. Participation in a meeting by this means constitutes presence at the meeting.
4. With respect to notice to partners:

a. Any notice to partners given by the partnership under any provision of this
chapter or the partnership agreement by a form of electronic communication
consented to by the partner to whom the notice is given is effective when given.
The notice is deemed given:
(1) If by facsimile communication, when directed to a telephone number at
which the partner has consented to receive notice;
(2) If by electronic mail, when directed to an electronic mail address at which
the partner has consented to receive notice;
(3) If by posting on an electronic network, on which the partner has consented
to receive notice, together with separate notice to the partner of the specific
posting, upon the later of:
(a) The posting; or
(b) The giving of the separate notice; or
(4) If by any other form of electronic communication by which the partners have
consented to receive notice, when directed to the partner.
b. An affidavit of the managing partner, other authorized partner, or authorized agent
of the partnership, that the notice has been given by a form of electronic
communication is, in the absence of fraud, prima facie evidence of the facts
stated in the affidavit.
c. Consent by a partner to notice given by electronic communication may be given
in writing or by authenticated electronic communication. The partnership is
entitled to rely on any consent so given until revoked by the partner. However, no
revocation affects the validity of any notice given before receipt by the partnership
of revocation of the consent.
5. Any ballot, vote, authorization, or consent submitted by electronic communication
under this chapter may be revoked by the partner submitting the ballot, vote,
authorization, or consent so long as the revocation is received by the other partners of
the partnership at or before the meeting or before an action without a meeting is
effective according to section 10-16-07.
6. Waiver of notice by a partner at a meeting by means of authenticated electronic
communication may be given in the manner provided in the partnership agreement.
Participation in a meeting by means of remote communication described in
subdivisions a and b of subsection 2 is a waiver of notice of that meeting, except when
the partner objects:
a. At the beginning of the meeting to the transaction of business because the
meeting is not lawfully called or conveyed; or
b. Before a vote on an item of business because the item may not lawfully be
considered at the meeting and does not participate in the consideration of the
item at that meeting.
