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LPC - BLP MODULE - DISSOLUTION OF A PARTNERSHIP (DISTINCTION)
- Module
- LPC
- Institution
- Swansea Metropolitan (UWTSD)
Notes on dissolving a partnership
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BLP NOTES – DISSOLUTION,Dissolution is when a partnership ends.
It may be by agreement between the partners or it may be where one partner is in a
position to insist contrary to the wishes of the other partners or it may be by circumstances
which had not been anticipated.
One of the main implications of dissolution is the question of what happens to the business
and its assets.
The circumstances for, and the consequences of, dissolution should be dealt with by a
partnership agreement, but failing that the partnership Act 1890 provides the details.
When does dissolution occur?
Dissolution of a partnership means that the contractual relationship joining all the current
partners comes to an end.
It may be that some of the partners succeed to the business and continue in a new
partnership with one another.
Sections 32-35 state that a partnership is expressed to be dissolved on the occurrence of
any one of several events, although most of these provisions may be excluded by
agreement.
Notice.
o Sections 26 and 32 - a notice of dissolution may be given by any partner to
the other or others.
o This notice need not state any reason for the dissolution and can have
immediate effect.
o It need not be in writing unless the partnership was by deed.
o A partnership which is terminable under section 26 is known as a partnership
at will.
Expiry of fixed term.
o A partnership dissolves on the expiry of a fixed term for which the partners
have agreed to continue in partnership, unless their agreement provides for
continuance after the fixed term has expired (section 32).
o This must be taken to give effect to what the partners intended in agreeing a
fixed duration.
o If the partners if fact continue their relationship after the fixed term has
expired, they will be presumed to be partners on the same terms as before
except that their new partnership is a partnership at will and its terms must
be consistent with that type of partnership (section 27).
Charging order over partners assets.
o A notice of dissolution may be given by the other partners to a partner whose
share in the partnership assets has been charged under section 23 by order
of the court as security for the payment of the partners own private debts
(section 33).
o A judgement creditor of a partner in his private capacity may use section 23
as a means of enforcing the judgement..
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