V. Dissolution

Question 1

Timeline of Dissolution

Answer 1

Dissolution–> Winding Up Period–>Termination

this is ordinary, can vary

Question 2

Causes of Dissolution

Answer 2

1. END OF A DEFINITE TERM: Partnership was formed for specific term and that term is up (e.g. 2 years)
2. ACOMPLISHING A PARITUCLAR UNDERTAKING: partnership has a “built-in-ending” which dissovles once underaking accomplished (e.g. selling subdivisino property–last one sold)
3. A PARTNER’S EXPRESS WILL OR WITHDRAWAL: ONe that does not have a buitl in dending.
   
   • most partnership’s are at will
   • only those with built in endings aren’t–in those instances, leaving before makes you liable for breach of contract for the others-WRONGFUL DISSOLUTION–although if all partners consent, it is okay
   • may be dissolved at any time with no penalty
4. EXPULSION OF A PARTNER: pursuant to partnership agrement
5. BY OPERATIN OF LAW: by deat of any partner, unless otherwise agreed, or if the partnership’s business becomes unlawful
6. ENTRY OF A JUDICIAL DECREE–discretionary

Question 3

Old Business

Answer 3

a partner who has not wrongfully dissolved may wind up affiars

partnership will be liable for expenses incurred in winding up (common sense)

Question 4

*Apparent Authority

Answer 4

• may continue after dissolution even if not winding up
• but the partnership can avoid liability by giving notice to potential creditors
  
  • statute is trying to create balance
• PRIOR CREDITORS are entiteld personal notice (they know their information)
• KNEW OF PARTNRSHIP, but not prior creditors, are entiteld to NEWSPAPER NOTICE
• DID NOT KNOW OF PARTNERSHIP: aren’t entitled to any notice

Question 5

Joint and Several Liability on Post-Dissolution Debts

Answer 5

Yes

Question 6

No Right to Contribution

Answer 6

• except where dissolution is by a partner’s express will, death or bankruptcy (where it may be hard to leanr of dissolution)
• Parnter is assumed to know when a term is up–so cannot do it after the term was up
• Could get it if the other partner’s gave express permission

Question 7

Distribution of Partnership Assets after Dissolution

Answer 7

Who gets paid, and in what order?

• FIRST: Third party creditors
• SECOND: To partners other than for capital & profits (e.g. loans)
• THIRD: To partners for capital
• FOURTH: TO partners for profits (whatever is left)–split whatever is left equally unless otherwise said

Question 8

Creditor’s Rights

Answer 8

JINGLE RULE

• Partnership creditors have priority on partnership assets;
• a partner’s separate creditors have priority on separate assets

Question 9

Continuing Partnership’s Business After Dissolution

Answer 9

this is what usually happens

1. CONSENT: all partners who have not wrongfully dissolved must consent
2. CREDITORS: automatically become creditors of the continuing partnership
3. BUYOUT: unless otherwise agreed, withdrawing partner gets his interest in the partnership as of dissolution plus interest or a pro rata share of profits.
   
   • wrongful dissolver is liable for breach