Under the Revised Uniform Partnership Act, dissociation of a partner does not necessarily dissolve the partnership, and the entity may continue with a buyout of the dissociating partner's interest.
Wrongful dissociation affects the buyout price and timing.
Alternative Names:
Dissolution of Partnership|Partnership Wind-Up
Why it Matters?
The distinction between dissociation and dissolution under RUPA changed the default substantially, since a departing partner no longer forces liquidation and instead receives a buyout while the business continues. Wrongful dissociation before the end of a definite term reduces the buyout by damages and defers payment until the term expires, which is a meaningful penalty. Partnership agreements frequently override these defaults entirely.
Frequently Confused with
Related terms
Frequently asked questions
Does a partner's departure dissolve the partnership?
What is the penalty for wrongful dissociation?
