Dissociation & Dissolution

If an Agency/Partnership essay appears on the UBE, the odds are reasonably high that the concepts of dissociation and dissolution will be included in that essay.

Here is some stuff to keep in mind:

A partner is dissociated from a partnership whenever the partnership has notice of the partner's intent to withdraw as a partner. A partner can dissociate at any time and the intent to withdraw (absent an agreement to the contrary) need not be in writing. If the partnership is at will and in dissociating no provision is breached in the partnership agreement, then the partner will have no further obligations towards other partners after dissociation. If, instead, the partnership is not at will, then wrongful dissociation might lead to liability on the part of the dissociating partner. 

Generally, when a partner dissociates from a partnership at will, dissolution of the partnership follows and the partnership must be wound up. But not always. Such dissolution can be rescinded by a vote of all remaining partners. Worth noting that the dissociating partner is no longer a partner and as such does not take part in that vote. 

If because of this vote the partnership is not dissolved, the dissociating partner is entitled to have the partner's interest purchased for a buyout price equal to that partner's interest in the value of the partnership. If the dissociated partner makes a written demand for payment and no agreement is reached within 120 days after demand, the partnership must make a payment equal to the amount it estimates as the buyout price plus any accrued interest. And if written demand is not made, the buyout price is still required to be paid to the dissociating partner but the 120 day limitation as to when payment must be paid does not apply.