1. 33.1 b a c kn e x t h o m e Chapter 33 Objectives  List the methods the partners may use to dissolve a partnership.  Discuss the reasons why a court may order dissolution of a partnership.  Identify those events that result in dissolution of a partnership by operation of the law.  Explain who should be notified of a partnership dissolution. © 2002 West Educational PublishingTo accompany Law for Business, 14e, by Ashcroft and Ashcroft

2. 33.2 b a c kn e x t h o m e Dissolution by Acts of the Parties  If no date for dissolution is fixed, when may the partners dissolve the agreement?  At any time.  If one partner voluntarily withdraws, can the business continue?  The business continues, but the legal partnership itself is dissolved.  How may a partner be expelled?  By any activity the partners agree upon in the partnership agreement. Quick Quiz Quick Quiz Quick Quiz Quick Quiz Quick Quiz Quick Quiz Quick Quiz Quick Quiz

3. 33.3 b a c kn e x t h o m e Dissolution by Judicial Decisions  Insanity of a partner  Insanity must be by court decree.  Incapacity  If partner develops an incapacity that makes it impossible for the partner to perform in the partnership.

4. 33.4 b a c kn e x t h o m e Dissolution by Judicial Decisions  Misconduct  If one partner acts to the detriment of the company.  Futility  All partnerships must operate for a profit. If this clearly is not being met, the partnership must be dissolved.

5. 33.5 b a c kn e x t h o m e Dissolution by Operation of the Law Death  Death of one partner dissolves partnership unless otherwise stated. Bankruptcy  Because people in bankruptcy no longer have responsibility for paying bills themselves, unlimited liability of the partner is destroyed. Illegality  If a partnership is formed legally then becomes illegal, it is dissolved. LAW

6. 33.6 b a c kn e x t h o m e Notice of Dissolution  To protect third parties, notice of dissolution must be given.  Usually customers and creditors are notified by mail.  Giving notice is not necessary when:  Someone was once a partner.  The partnership was dissolved by operation of the law.  The partnership was dissolved by judicial decree.  A dormant or secret partner retires.

7. 33.7 b a c kn e x t h o m e Distribution of Assets Partners who have advanced money are entitled to reimbursement Each partner is entitled to the return of contributed capital Remaining assets are distributed equally