Dissociation

Question 1

Dissociation definition

Answer 1

When a partner ceases to be associated with partnership

Can be VOLUNTARY or INVOLUNTARY

Question 2

Voluntary dissociation

Answer 2

Partner may give NOTICE to partnership that he wishes to withdraw

Agreement can include restrictions on withdrawal (written notice, liability, etc)

Question 3

Involuntary dissociation scenarios

Answer 3

-triggered by partnership agreement
-expelled pursuant to agreement
-unlawful for business with that partner to continue
-court can order partner to be dissociated
-partner goes bankrupt
-partner dies
-partner becomes incapacitated
-one of the entities in partnership dissolves

Question 4

Can a partner be prevented from withdrawing from partnership

Answer 4

NO, but subject to some restrictions on withdrawal conditions

Question 5

Does partnership dissolve upon dissociation?

Answer 5

NO, no necessarily

Question 6

If partnership continues after dissociation, what happens to former partner’s interest?

Answer 6

must be BOUGHT OUT

Question 7

What happens to former partners’ duties upon dissociation?

Answer 7

NO right to participate in management

NO duties to partnership

Question 8

Wrongful dissociation

Answer 8

Partner may be sanctioned for wrongful dissociation through liability for damages

Buyout can be delayed until term of completion expires