A business partnership can be very fruitful for a company. Partners can share responsibilities in terms of managing team members and making financial investments. Nonetheless, there are few business partnerships that go on forever. In fact, many are only set up to give the company a short-term boost.
When dissolving a partnership, it’s important that all the appropriate legal steps are taken. It can be helpful to first understand the different ways that a partnership may be dissolved.
Dissolution by mutual consent
Sometimes, partners just realize that it isn’t working out. They can then dissolve the partnership by mutual consent. Ideally, this should be a win-win for all parties, and discussions can usually be held without having to litigate. Partners can then reach mutual agreements on things like buyouts, contractual obligations and much more.
Formal notice
Dissolutions are not always mutual. Sometimes, one partner may simply want to leave. To do so lawfully, they will typically have to provide formal written notice. This can specify the reasons for leaving and the timeframe at which they want to be released from the partnership.
The end of the contract
In some cases, the partnership agreement may specify a set time period. For example, a partner may have been brought in on a one year basis to improve the company. Once that contract expires, the partnership may be resolved. Of course, a renewed contract is also an option in these circumstances.
These are some of the more common ways that partnerships can be dissolved. Unfortunately, when disputes arise or fiduciary duties are breached, then a partnership dissolution may have to be litigated. Seeking legal guidance can help you to get the most out of your business partnership.