Partnership termination refers to the way in which a business partnership is legally ended. In most cases, a partnership will terminate in a "natural" way, such as when the business aim of the partnership has been achieved. In other cases, a partnership may terminate prematurely due to unexpected circumstances, such as the death of a partner, or due to an illegal violation.
How is Partnership Termination Accomplished?
State laws governing partnership formation will vary. Also, the procedure for partnership termination may vary according to whether the partnership is a general partnership or a limited partnership. Dissolving a general partnership often occurs if a partner dies, becomes incapacitated, or formally expresses her desire to disassociate from the partnership.
Partnership termination is different with a limited partnership or limited liability partnership. Withdrawing from a limited partnership usually does not automatically terminate the entire organization. In order to terminate a limited partnership, it’s usually necessary to file termination papers with the state’s business authorities.
What if I Have a Dispute Involving Partnership Termination?
A common dispute with partnership termination occurs when one or more of the partners disagree with the decision to terminate the partnership. In most cases, the partners will need to consult the partnership agreement, which should state procedures for termination and conflicts. A similar situation occurs when the remaining partners contests the withdrawal of a partner from a contract or business deal.
Another common dispute involved in many partnerships is the issue of property distribution. Again, this likely depends on whether the partnership is general or limited. For general partnerships, the partners are typically entitled to equal distributions of partnership property. For limited partnerships, the property is usually distributed according to each partner’s individual contributions to the partnership.
Do I Need a Lawyer for Assistance with Partnership Termination?
Partnership termination is a complex area of business law. Also, there can be much variation for termination, depending on the type of partnership as well as individual state laws. You may wish to hire a business lawyer if you need help with partnership termination or other related business matters. A qualified lawyer in your area will be able to recommend options for you to follow, and can represent you in court if needed.