dissolution of partnership

Question 1

what is dissociation

Answer 1

change in relationship of the partners due to a partner ceasing to be associated in the carrying on of business

Question 2

list (7)

Ways in which a partner become dissociated

Answer 2

1. oral or written notice of partner’s express will to withdraw
2. happening of an agreed event
3. valid exclusion of partner
4. partner’s bankruptcy
5. partner’s death or incapacity to perform PS duties
6. decision of ct
7. termination of a business entity that is a partner

Question 3

wrongful dissociation

IOW: partner wrongfully dissociated if

Answer 3

partner wrongfully dissociated if

1. disassociation is in breach of an express term in PS agreement
2. P withdraws, expelled, or bankrupts before end of term

P who wrongfully dissociates is liable to PS for damages

Question 4

at-will PS

Answer 4

partners have not agreed to remain partners until expiration of a definite term

default form of PS

Question 5

term PS

Answer 5

Partners have agreed explicit or implicit to remain partners for a definite term or until completion of a certain undertaking

Question 6

consequences of dissociation

Answer 6

1. PS is dissolved and needs to be liquidated (aka sold off)
2. PS continues existing but dissociated partner is entitled to a buyout granted they didn’t wrongfully dissociate before termination or before completion of a certain undertaking unless can show substantial hardship

Question 7

dissolution for at-will PS and term PS or before death/bankruptcy

Answer 7

1. if partner dissociates by express will in an at-will PS, PS is dissolved and has to be wound up
2. if P dissociates in a term PS or before death or bankruptcy, then dissolution & winding up required only IF within 90 days of dissociation at least half of Ps agree to wind up

Question 8

if no dissolution and winding up then dissociating partner

Answer 8

entitled to receive a buyout of his PS interest & remaining Ps can continue business

Question 9

liability of dissociated P

Answer 9

• liable for an pre-d PS obligatons
• post-d liable within 2 yrs if
  
  1. other party reasonably believed partner was still part of PS (when party entered the agreement with PS)
  2. party did not have notice

Question 10

PS can be liable for dissociated P if

Answer 10

within two years after dissociation

1. act would have bound the PS before dissociation
2. other party to the transaction
   
   1. reasonably believed the dissociated partner was still a partner
   2. no notice of dissociation

Question 11

dissolution

Answer 11

PS assets used to pay off debts and if not enough then Ps are liable in accordance with their loss share

Question 12

when can at will PS be dissolved

Answer 12

any time

Question 13

priority of distribution

Answer 13

creditors → contributions paid by Ps into PS → profits/losses if any

Question 14

who can wind up

Answer 14

all living partners except wrongfully dissolved and bankrupt partners

dead partner can use a representative

Question 15

each P is jointly and severally liable for partnership obligations

Question 16

In the absence of an agreement, P’s share profits equally and losses are split in the same ratio as profits

Question 17

Where one partner pays the entire amount of a partnership debt, she may require the other partner(s) to contribute their pro rata share of the payment

Question 18

A partnership will be bound by a partner’s post-dissolution act if the act was appropriate for winding up the business unless the third party did not have notice and the act would have bound the partnership before dissolution