Rules from model answers Flashcards
When can a partner withdraw from the partnership.
A partner has the power to dissociate from the partnership at any time, even if the dissociation is wrongful. For a partnership that is unlimited by time or undertaking, a partner’s dissociation is wrongful only when it is in breach of an express provision of the partnership agreement.
For a partnership that is for a definite term or undertaking, the partner’s dissociation is wrongful when, before the expiration of the term or completion of the undertaking, the partner.
You have the right to withdrawal even if it is to pursue another business opportunity, although this may breach fiduciary duties.
What are the legal effects of withdrawing from the partnership.
A partnership at will is an open-ended partnership that does not have a fixed termination based on a period of time or particular undertaking. A partnership at will is dissolved when a partner chooses to dissociate from the partnership by giving notice of his withdrawal. A dissociated partner generally does not have the right to participate in the management or conduct of the partnership business.
PARTNER’S DUTIES: A partner’s duty not to compete terminates upon dissociation. The dissociated partner’s other duties of loyalty and care terminate with respect to post-dissociation events, unless the partner participates in winding up the partnership’s business if the partnership itself dissolves.
Finally, a person who is winding up the partnership business may dispose of and transfer partnership property and may discharge the partnership’s liabilities.
What happens if a partner buys a building after withdrawing that the partnership had wanted to buy?
If the partner is participating int he winding up then his duties of loyalty (except for duty not to compete) remain intact and this would be a breach based on usurping a business opportunity.
