Also known as: partners dissociation · partner dissociation · dissociation of partner · dissociation
Written by attorneys · grounded in primary & secondary sources — see below
The event by which a person ceases to be a partner or member in a partnership or limited liability company. Dissociation ends the person's right to participate in management and ongoing fiduciary duties while preserving liability for obligations incurred before the event and limiting post-event authority to a two-year window under specified conditions.
Portia Price withdraws as a member of Prosperity Investments LLC after the company incurs a bank loan. The loan remains unpaid. Price's dissociation does not release her from the obligation she incurred while a member, so the company and other members may still pursue her for repayment.
Parker Phillips dissociates as general partner of Progressive Healthcare LP after the partnership signs a long-term equipment lease. The lease obligation was incurred while Phillips served as general partner. His dissociation leaves that pre-existing liability intact despite his departure from management.
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Priya Prasad dissociates from Pinnacle Holdings partnership. Less than two years later the remaining partners enter a supply contract with a vendor that reasonably believes Prasad remains a partner and has no notice of her departure. The partnership is bound and Prasad faces potential liability for resulting damages.
Phuong Pham dissociates as a member of Pioneer Energy LLC. After dissociation Pham attempts to vote on a major capital expenditure. Her right to participate in management has terminated, so the vote is invalid and the company proceeds without her input on post-dissociation matters.
Patrick Phan dissociates as a limited partner of Prosperity Investments LP. The partnership has not decided to make an interim distribution. Phan's dissociation alone gives him no right to demand or receive any distribution from the partnership.
Pedro Pacheco dissociates as a partner in Progressive Healthcare partnership. More than two years later the remaining partners enter a new consulting contract. Pacheco is not liable on the obligation because the transaction falls outside the statutory window following dissociation.
Dissociation occurs when the partnership has notice of the partner's express will to withdraw unless the partner clearly specifies a later date. Conduct inconsistent with continued participation can accelerate the effective date to the point at which notice is clear.
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Yes. Dissociation is wrongful if it breaches an express term of the partnership agreement or occurs before winding up is complete under specified statutory events. Wrongful dissociation exposes the partner to damages liability in addition to pre-existing obligations.
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A dissociated partner is generally not liable for obligations incurred after dissociation. Liability arises only if the transaction occurs within two years, a current partner would be liable, and the third party reasonably believes the person remains a partner without knowledge or notice of dissociation.
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No. A transfer of a transferable interest in whole or in part does not by itself cause dissociation, dissolution, or winding up. The transferor retains partner status and all non-economic rights and duties while the transferee receives only economic rights to distributions.
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