Dissassociation

Question 1

DISSOCIATION

Answer 1

Dissociation is a change in the relationship of the partners caused by any partner ceasing to be associated in the carrying on of the business. Dissociation of a partner does not necessarily cause a
dissolution and winding up of the partnership business. The term simply refers to a withdrawal. When a partner dissociates from a partnership, the partner withdraws or “bows out” of the partnership.

Question 2

Events of Dissociation

Answer 2

A partner becomes dissociated from the partnership by: (1) oral or written notice of the partner’s express will to withdraw; (2) happening of an agreed event; (3) valid expulsion of the partner; (4) the partner’s
bankruptcy or the appointment of a receiver for a partner; (5) the partner’s death or incapacity to perform partnership duties; (6) the decision of a court that the partner is incapable of performing a partner’s duties; or (7) termination of a business entity that is a partner.

Question 3

Wrongful Dissociation

Answer 3

A partner will be deemed to have wrongfully dissociated if the dissociation is in breach of an express term in the partnership agreement. A dissociation is also wrongful in a term partnership if the partner withdraws, is expelled, or becomes bankrupt before the end of the term. A partner who wrongfully dissociates is liable to the partnership
for any damages caused by the dissociation.