Legal Definitions - dual-priorities rule

The dual-priorities rule is a principle that states that partnership creditors have priority for partnership assets, while individual creditors have priority for a partner's personal assets. This means that if a partnership goes bankrupt, the partnership's creditors will be paid first from the partnership's assets, and if there is any money left over, the individual creditors will be paid from the partner's personal assets.

For example, if John and Jane are partners in a business, and the business goes bankrupt, the partnership's creditors will be paid first from the business's assets. If there is any money left over, John's personal creditors will be paid from his personal assets, and Jane's personal creditors will be paid from her personal assets.

However, this rule has been abandoned by the bankruptcy laws and the Revised Uniform Partnership Act. The Bankruptcy Code now allows partnership creditors access to all assets of bankrupt partners, not just those remaining after payment to individual creditors. This means that if John and Jane's business goes bankrupt, all of their assets will be used to pay off the partnership's creditors, regardless of whether they are personal or partnership assets.