Dissolution of the Partnership Flashcards
Does dissolution immediately terminate the partnership?
Dissolution of a partnership does NOT immediately terminate the partnership.
The partnership enters a “winding up” phase, which continues until the winding up of the partnership affairs is completed.
What triggers dissolution?
The most common trigger is partner dissociation
but..
operation of law (business becomes illegal)
or court order
can trigger as well.
How can a partner dissociate?
Partners may dissociate voluntarily by providing notice to the other partners of their express will to withdraw.
The notice doesn’t have to be written.
Partners may dissociate voluntarily at any time, regardless of whether withdrawing breaches any partnership agreement.
Does a rightful dissociation breach the partnership agreement?
NO
What is a wrongful dissociation?
A wrongful dissociation breaches the partnership agreement and gives the other partners a claim for damages.
How does a partnership for a term/particular purpose affect dissociation?
If the partnership is for a definite term or particular undertaking, a dissociation is wrongful if the partner withdraws before the expiration of the term or the completion of the undertaking.
How does an at-will partnership affect dissociation?
Any member of an at-will partnership can dissociate at any time automatically triggering dissolution and liquidation.
How can a partnership continue when a partner dissociates?
dissolution can be rescinded, and the partnership continues, by the affirmative vote or consent of all remaining partners.
How does the Revised Uniform Partnership Act pertain to dissolution?
In some states, a partnership must buy out a dissociated partner.
How is partner buyout calculated under the Revised Uniform Partnership Act ?
Under the Revised Uniform Partnership Act, the buyout price is what the partner would receive if the partnership were either sold as a going concern or, if greater, liquidated on the date of the dissociation, minus any damages if the dissociation is wrongful and any amounts the dissociating partner owes the partnership.
