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Questions and Answers
What is a possible reason for the dissolution of a partnership?
In the context of partnerships, what does dissolution mean?
When can dissolution happen in a partnership?
What might lead to the formation of a new partnership at the end of a fixed term period?
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How does the absence of a Partnership Agreement impact the continuity of a partnership?
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Which event can dissolve a partnership under the Partnership Act 1980 if not excluded by an express term in the partnership agreement?
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Under what circumstances does a partnership at will determine with immediate effect?
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What happens to a fixed-term partnership upon the end of that fixed term according to the Partnership Act 1980?
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What legal event can cause a partnership to terminate immediately if the agreement was entered into as a Deed?
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How can partners exclude various dissolution events under the Partnership Act 1980?
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Study Notes
Continuation of Partnership and Dissolution
- Continuation of a partnership cannot be taken for granted, especially if there are changes in personnel (e.g., a partner leaves or joins).
- Clients need to understand how their partnership can be dissolved.
- Dissolution may happen unexpectedly, such as in a fixed-term partnership at the end of the fixed term.
Dissolution
- Dissolution is the end of the contractual relationship between partners.
- It may occur due to agreement, insistence of one partner, or unforeseen circumstances (e.g., a partner's death).
- Without a partnership agreement that provides a mechanism for continuation, the partnership will dissolve.
Dissolution under Partnership Act 1980
- The Act specifies events that dissolve a partnership, which can be excluded by express terms in a written partnership agreement.
Partnership at Will
- A partnership at will (no fixed term) determines with immediate effect upon service of notice (ss 26 and 32).
- Written notice is required if the partnership agreement was entered into as a Deed.
- The partnership agreement may impose conditions on the use of notice, such as a "honeymoon" or "start-up" period.
Expiry of a Fixed Term
- A fixed-term partnership dissolves upon the end of that fixed term (ss 27 and 32).
- If partners continue to carry on in business together, they are presumed to be partners on the same terms as before, but the new partnership is at will.
Death and Bankruptcy
- Death automatically terminates the partnership under s 33 PA1890.
- The Personal Representatives of the deceased partner collect the deceased partner's entitlement upon dissolution.
- Bankruptcy also automatically terminates the partnership under s 33 PA1890.
- The trustee in bankruptcy collects the bankrupt partner's entitlement upon dissolution.
- It is common to provide for death and bankruptcy not to dissolve the partnership, and instead provide for the remaining partners to purchase the deceased or bankrupt partner's share.
Charging Order over Partner's Assets
- A charging order over a partner's assets may lead to notice of dissolution under s 33 PA1890.
- A common provision is to exclude the dissolution of the partnership in such cases.
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Description
Explore the complexities of partnership continuation when personnel changes occur and understand the process of bringing a partnership to an end through dissolution. Learn about unexpected dissolution scenarios, such as in fixed term partnerships.
