Short answer. Yes. Article 1837 gives the innocent partners the right to recover damages from the partner who dissolved the partnership in breach of your agreement. That right sits alongside the ordinary winding-up rights, and if you continue the business, the wrongdoer's payout is reduced by the damage his breach caused.

What the law says

The right, as against each partner who has caused the dissolution wrongfully, to damages

Civil Code, Article 1837 — Rights on Winding Up. Read the full provision →

Wrongful dissolution creates a right to damages

Article 1837 divides dissolutions into those caused within the agreement and those caused in contravention of the partnership agreement. When a partner ends the partnership wrongfully — walking away before the agreed term, or otherwise breaking the deal — the Code says each partner who did not cause the dissolution has the right, as against each partner who has caused the dissolution wrongfully, to damages for that breach. This is a distinct entitlement, on top of the ordinary right every partner has to have the property applied to the debts and the surplus paid out in cash to the respective partners.

Continuing the business, and what the wrongdoer gets

You are not forced to liquidate. Article 1837 lets the partners who did not cause the dissolution, if they all wish, carry on the business in the same name during the agreed term for the partnership, provided they either secure payment by a bond approved by the court or pay the wrongdoer the value of his interest. Crucially, that value is calculated less any damages recoverable for his breach — so the damages are not only a separate claim you chase later; they are netted directly against what you owe him for his share. His stake in the firm effectively helps fund part of your loss.

Good-will is left out of the wrongdoer's share

There is a further consequence built into the valuation. When the business is continued and the wrongdoer's interest is bought out, Article 1837 provides that in ascertaining the value of the partner's interest the value of the good-will of the business shall not be considered. Good-will — the earning power of the established name and its clientele — can be a large part of a firm's worth. Excluding it means the partner who broke the agreement is paid only for the tangible value of his share, not for the reputation the partnership built up over its life.

Dissolution does not erase existing debts

Recovering damages is separate from the partnership's liabilities, which do not vanish when it dissolves. Article 1835 states that the dissolution of the partnership does not of itself discharge the existing liability of any partner. A partner is released only by an agreement among himself, the creditor, and whoever continues the business. So while you pursue the wrongdoer for the harm his breach caused, the firm's creditors can still look to all of you; sorting the damages out between partners is an internal accounting that does not bind those outside creditors.

Cases citing this provision

These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.

Related provisions

Note. Statute text quoted on this page is reproduced from the official enactment and is linked to the full provision. The explanation around it is general legal information from Vivas & Nobles Law Office, not legal advice. Whether it applies to your situation depends on facts only a lawyer reviewing them can assess.