Dissolution

Question 1

What is a “dissolution”?

Answer 1

Unlike dissociation, dissolution generally requires the partnership business to be wound up

Question 2

What is a “partnership at will”?

Answer 2

“partnership at will” is when a partnership if formed with no particular undertaking or definite term

Question 3

What is the rule re: dissolution of a partnership at will?

Answer 3

A partnership at will can be dissolved at any time by the express will (notice of dissolution) of any partner without penalty

Question 4

What events cause dissolution of a partnership under RUPA (6) ?

Answer 4

1. In a partnership at will –> notification by any partner of express will to withdraw as partner;
2. In partnership for definite term or particular undertaking –>
   (i) expiration of the term or completion of the undertaking;
   (ii) consent of all of the partners to dissolve, or
   (iii) within 90 days of partner’s death, bankruptcy, or wrongful dissociation, at least half of the remaining partners wish to dissolve
3. The happening of an agreed event that requires winding up of business;
4. the happening of event that makes in unlawful for the partnership to continue
5. Issuance of a judicial decree on application of partner that:
   (i) the economic purpose of the partnership is likely to be frustrated;
   (ii) a partner has engaged in conduct making it not reasonably practicable to carry on the business;
   (iii) the business cannot practicably be carried on in conformity with the partnership agreement
6. issuance of a judicial decree on application by a tranferee of partner’s interest that it is EQUITABLE To wind up the partnership:
   (i) after term expires or undertaking is completed in a partnership for a definite term or particular undertaking; OR
   (ii) at any time in a partnership at will

Question 5

What is the partner’s power to bind partnership after dissolution?

Answer 5

Partnership can be bound after dissolution by:

1. any act of partner appropriate for winding up the partnership’s business
2. other acts if the party with whom a partner dealt did not have notice of the dissolution

NOTE –> such liability can be limited by filing a statement of dissolution with the secretary of state. All persons are deemed to have notice of dissolution 90 days after such notice is filed

Question 6

Does the partnership continue after dissolution?

Answer 6

Partnership continues to exist after dissolution to wind up partnership

Question 7

Who may wind up?

Answer 7

In general –> all living partners have a right to participate in the winding up of the partnership’s business EXCEPT:

1. partners who wrongfully dissolved;
2. partners who are bankrupt

If all partners died –> legal representative of last surviving partner may wind up

Question 8

What is the rule re: waiver of dissolution?

Answer 8

Any time before winding up is complete, partners may decide to waive the dissolution and continue the partnership by unanimous vote of the partners who have not wrongfully dissolved.

NOTE –> such waiver does not affect the rights of persons who have relied on dissolution before receiving notice of the waiver

Question 9

In a dissolution, what is the order of distribution of assets?

Answer 9

Partnership liabilities are paid in the following order:

1. Creditors, including partners who are creditors
2. Partner’s accounts

Question 10

What happens if, in a dissolution, a partner is forced to pay more than his fair share of partnership debts?

Answer 10

He is entitled to contribution from other partners