Short answer. If your expulsion was in good faith under the partnership agreement, and you are discharged from all partnership liabilities, Article 1837 says you receive in cash only the net amount due you from the partnership. You are cashed out at the value of your interest after debts — you do not share in future profits or good-will.

What the law says

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 the second paragraph of article 1835, he shall receive in cash only the net amount due him from the partnership.

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

A good-faith expulsion under the agreement

Article 1837 treats an expelled partner more narrowly than a partner who leaves in an ordinary dissolution. It applies where dissolution is caused by expulsion of a partner, bona fide under the partnership agreement. Two things must therefore be true: your removal was carried out in good faith, and it was done under a power the partnership agreement actually gave. An expulsion that was not authorized by the agreement, or that was done in bad faith, falls outside this rule and can expose the firm to other consequences. When the expulsion is proper, the article fixes what you are owed in a deliberately limited way.

You receive the net amount, in cash

For a validly expelled partner the payout is defined tightly: he shall receive in cash only the net amount due him from the partnership. This is the value of your interest after the partnership's obligations are accounted for — your share of what is left once debts and liabilities are settled. The word only does real work here. You are entitled to be paid out and to receive money rather than being kept in as a continuing participant, but your recovery is confined to that net figure. You do not get to insist on a full liquidation designed to give you more than the net amount your interest represents.

You must be discharged from partnership liabilities

The cash settlement comes tied to a condition about the firm's debts. The article applies where the expelled partner is discharged from all partnership liabilities, either by payment or agreement under the second paragraph of article 1835. This matters because Article 1835 says that dissolution does not, by itself, discharge the existing liability of any partner. Your release from the partnership's debts is not automatic on expulsion; it happens by payment, or by an agreement among you, the creditor, and whoever continues the business. So the clean exit the rule describes assumes you have actually been freed from those liabilities.

What you do not receive

The limits are as important as the entitlement. Being cashed out at the net amount means you do not continue to share in the profits the business earns after you are gone, nor do you receive a premium for the firm's good-will — the earning power of its established name and clientele. You are paid for the value of your interest, not for the future of a business you no longer belong to. This is the trade-off the Code strikes for a proper expulsion: a clean, prompt cash settlement and a discharge from the firm's debts, in place of any ongoing stake in the venture.

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.