Dissociation

Question 1

Partner’s Power to Dissociate in a GP or LLP

Answer 1

Partners always have the power to dissociate upon giving notice to the partnership.

Wrongful dissociation = dissociation in violation of an express provision of the PA.
Partner who wrongfully dissociates is liable for any damages caused.

Question 2

Events causing a partner’s dissociation

Answer 2

• death
• bankruptcy (wrongful if partnership is for a definite term or undertaking)
• appointment of a guardian
• judicial determination that partner is incapable of performing duties of a partner
• occurrence of an event specified in PA that triggers dissociation
• expulsion from partnership pursuant to a provision in the PA, unanimous vote of other partners, or judicial termination made upon application of partner.

Question 3

Dissociation of a Partner in LP

Answer 3

General Partner - dissociation is wrongful if it occurs before the termination of the LP

Limited Partner - no right to dissociate

Question 4

Consequences of Dissociation

Answer 4

Ends partner’s rights to co-manage and conduct partnership business.

Partner is still liable for partnership obligations incurred before dissociation

Ends partner’s duties of loyalty and care going forward (still under duty for matters occurring before dissociation).

May compete with partnership after dissociation.