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wish to continue the business of a term partnership can not be | forced to liquidate the business by a partner who withdraws | prematurely in violation of the partnership agreement. |
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| | Those rules are gleaned from the separate UPA provisions | governing dissolution and its consequences. Under UPA Section | 31(1)(b), dissolution is caused by the express will of any | partner when no definite term or particular undertaking is | specified. UPA Section 38(1) provides that upon dissolution any | partner has the right to have the business wound up. That is a | default rule and applies only in the absence of an agreement | affording the other partners a right to continue the business. |
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| | UPA Section 31(2) provides that a term partnership may be | dissolved at any time, in contravention of the partnership | agreement, by the express will of any partner. In that case, | however, UPA Section 38(2)(b) provides that the nonbreaching | partners may by unanimous consent continue the business. If the | business is continued, they must buy out the breaching partner. |
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| | 4. Section 801(1) provides that a partnership at will is | dissolved and its business must be wound up upon the | partnership's having notice of a partner's express will to | withdraw as a partner, unless a later effective date is specified | by the partner. A partner at will who has already been | dissociated in some other manner, such as a partner who has been | expelled, does not thereafter have a right to cause the | partnership to be dissolved and its business wound up. |
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| | If, after dissolution, none of the partners wants the | partnership wound up, Section 802(b) provides that, with the | consent of all the partners, including the withdrawing partner, | the remaining partners may continue the business. In that event, | although there is a technical dissolution of the partnership and, | at least in theory, a temporary contraction of the scope of the | business, the partnership entity continues and the scope of its | business is restored. See Section 802(b) and Comment 2. |
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| | 5. Section 801(2) provides three ways in which a term | partnership may be dissolved before the expiration of the term: |
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| | (i) Subsection (2)(i) provides for dissolution after a | partner's dissociation by death or otherwise under Section 601(6) | to (10) or wrongful dissociation under Section 602(b), if within | 90 days after the dissociation at least half of the remaining | partners express their will to dissolve the partnership. Thus if | a term partnership had six partners and one of the partners dies | or wrongfully dissociates before the end of the term, the | partnership will, as a result of the dissociation, be dissolved | only if three of the | remaining five partners affirmatively vote |
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