Partnership Dissolution Agreement

In regard to business law, the Partnership Dissolution Agreement is a relatively complex area. There are several variations of the partnership business structure, to begin with, and thus the entanglement may vary. If you are uncertain about anything, retaining a business formation attorney may be beneficial.

In some instances, the partners might disagree not to terminate a partnership. This can lead to a dispute, which may make it necessary to consult the official partnership agreement. This agreement would stipulate how disputes in the partnership are to be disposed of.

The technical termination of partnership happens when there is a sale or an exchange of more than half of the partnership's total interests in a one-year period. When this happens, all of the assets and liabilities of the old partnership would then be added to the new partnership. The common use of a technical termination of partnership is when there is a need to remove unfavorable elections in the partnership.

"Winding up" describes the liquidation of all remaining assets after the dissolution of a partnership. More often than not, one partner is selected to take charge of the liquidation, and they are so designated in the Partnership Dissolution Agreement. In short, the company's accounts are to be brought to zero after disposing of assets and liabilities.

Sometimes, rather than leading to the dissolution of a partnership, things may only lead to a dissociation. The end results are generally the same but dissociation does not immediately lead to liquidation. For example, dissociation may be expected if one of the partners withdraws and plunges the partnership into a period of uncertainty.