Also known as: at will nature of partnerships · at-will partnership · partnership at will · at-will partnership doctrine
Written by attorneys — see sources below.
A principle permitting any partner to dissociate from the partnership at any time by express will when the partners have not agreed to remain partners until the expiration of a definite term or the completion of a particular undertaking. Dissociation under this principle triggers dissolution and winding up upon notice to the partnership.
Alexis Archer and Aaron Adams formed a partnership at will to run a local delivery service with no agreed term. After several months of disagreements, Alexis sent Aaron a letter stating her express will to withdraw immediately. Upon receiving the letter, the partnership dissolved by operation of law, requiring the business to wind up and account for all assets and liabilities as of that date.
Andrew Avery and Amelia Amari formed a partnership to operate a laundry business with no definite term specified in their agreement. When Andrew sought to end the relationship due to shifting market conditions, Amelia could not force continuation. Andrew's dissociation took effect upon notice, leaving the partners free to separate without liability for the act of withdrawal itself.
George B. Page and H.B. Page formed an oral partnership in 1949 to operate a linen supply business in Santa Maria, California. Each partner contributed approximately $43,000 within the first two years to purchase land, machinery, and linen for the business. From 1949 to 1957 the partnership lost approximately $62,000. The partnership's primary creditor is a corporation owned entirely by plaintiff that holds a $47,000 demand note issued by the partnership. The business earned profits of $3,824.41 in 1958 and $2,282.30 in the first three months of 1959. Plaintiff then sought to end the partnership. Defendant testified that the partnership terms were intended to be similar to prior partnerships between the parties, under which the business would pay for itself. On cross-examination, however, defendant stated that there had been no discussion about continuing the business in the event of losses. The trial court determined that the partnership was for a term consisting of the reasonable time needed to repay the partnership's debts from profits. Plaintiff appealed from this judgment to the Supreme Court of California.
View caseIn an at-will partnership, a partner may withdraw by express will at any time and the dissociation is rightful. In a definite-term or particular-undertaking partnership, an early withdrawal by express will is wrongful and exposes the partner to damages liability.
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Dissolution occurs when the partnership knows or has notice of a partner's express will to withdraw. If the partner specifies a later date, dissolution takes effect on that later date instead.
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No. Partners always retain the power to dissociate by express will regardless of any agreement language attempting to restrict withdrawal. An agreement may affect whether the dissociation is wrongful but cannot eliminate the power itself.
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No. The statute focuses solely on whether notice of express will to withdraw has been given. Later conduct by the withdrawing partner or the remaining partners does not alter the dissolution date fixed by the notice.
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…for the continuance of said partnership, nor upon any particular undertaking to be accomplished; that the said partnership was a partnership at will.” From this finding the court concluded that plaintiff was entitled to a dissolution under section 2425, subdivision (1) (b), of the Civil Code. The court further found that the parties…