Also known as:wrongful dissociations · wrongfully dissociate · wrongfully dissociated · wrongful withdrawal
Written by attorneys · grounded in primary & secondary sources — see below
A partner's withdrawal from a partnership that breaches an express provision of the partnership agreement or occurs before the expiration of a definite term or completion of a particular undertaking without qualifying exceptions. The withdrawing partner becomes liable to the partnership and remaining partners for damages caused by the dissociation in addition to any other obligations owed.
Sources & Authorities
How it applies
Common Examples
2
Mid-Project Withdrawal Triggers Liability
Watershed Pharmaceuticals and Walker Valley Produce formed a limited partnership to complete a three-year drug distribution contract. Midway through the term, Walter Washington sent written notice withdrawing as a general partner. The partnership incurred replacement costs and lost revenue when the contract could not be performed on schedule. The partnership recovered damages from Walter Washington because his express-will withdrawal before completion of the undertaking met the criteria for wrongful dissociation.
Partner Exit During Ongoing Venture
Saint Alphonsus Diversified Care, Inc. and two other entities formed MRI Associates to operate diagnostic equipment under a multi-year agreement. One partner withdrew by written notice while the partnership continued active operations and before any winding up. The remaining partners recovered damages because the withdrawal occurred before completion of the partnership's undertaking and qualified as wrongful dissociation.
Put it into practice
Test Yourself
10
Practice Questions5
· 3 primary sources
Select any source to read its text and confirm it supports the definition.
Uniform Acts
Casebooks
Study Supplements
Saint Alphonsus Diversified Care, Inc. v. MRI Associates, LLP224 P.3d 1068 (2009)
Common questions
Frequently Asked
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What makes a partner's dissociation wrongful rather than rightful?+
A dissociation is wrongful if it breaches an express provision of the partnership agreement or if the partnership is for a definite term or particular undertaking and the partner withdraws by express will before the term expires or the undertaking is completed without a qualifying exception such as following another partner's dissociation within ninety days.
Supporting sources
Does a partner always have the power to dissociate even if the dissociation is wrongful?+
Yes. A partner always possesses the power to dissociate at any time by express will. Wrongfulness affects only the availability of damages and does not eliminate the power itself.
Supporting sources
Who may recover damages when a partner dissociates wrongfully?+
The partnership itself and the remaining partners may recover damages caused by the wrongful dissociation in addition to any other obligations the dissociating partner owes.
Supporting sources
Does the absence of an express non-withdrawal clause in the agreement prevent a finding of wrongful dissociation?+
No. Wrongful dissociation can still occur in a term or particular-undertaking partnership when the partner withdraws by express will before the term expires or the undertaking is completed even if the agreement contains no separate prohibition on withdrawal.
Supporting sources
Business Associations RelationshipsFormation, management, and control of general partnerships · Formation, management, and control of general partnershipsNEXTGENFoundational