Also known as: partnerships at will · at-will partnership · at will partnership
Written by attorneys — see sources below.
A partnership in which the partners have not agreed to remain partners until the expiration of a definite term or the completion of a particular undertaking. Dissolution occurs when the partnership receives notice of a partner's express will to withdraw, effective on the date specified in the notice if later than receipt.
Philip Powell and Penelope Price operate a boutique as a partnership at will. Philip mails Penelope a certified letter stating his express will to withdraw effective at the end of the current lease nine months later. Penelope receives the letter and continues operations while entering a long-term supply contract. The partnership dissolves on the lease expiration date specified in the notice.
Priscilla Parks and Paula Pierce contribute capital to a linen supply business that loses money for several years. Priscilla claims an oral understanding created a definite term tied to repaying debts from profits. Paula maintains no such agreement existed and the business remains at will. The court examines the absence of any express term or particular undertaking and classifies the arrangement as a partnership at will.
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 caseA partner withdraws by giving the partnership notice of express will to withdraw. Dissolution occurs on the date of notice or any later date the partner specifies in the notice.
Continued work after notice does not override the specified withdrawal date. The statute gives effect to the express will stated in the notice even if the withdrawing partner assists during the transition.
Withdrawal from a partnership at will is not wrongful. Wrongful dissociation arises only in term partnerships or particular undertakings when a partner leaves early without meeting statutory exceptions.
Absence of any agreement fixing a definite term or particular undertaking establishes at-will status. Oral understandings about repaying debts from profits do not create a term when the partners never discussed continuation in the event of losses.
…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…