How do you dissolve a business partnership when you have no formal partnership agreement, just a business lease agreement that will expire soon?

UPDATED: Jul 16, 2012

Advertiser Disclosure

It’s all about you. We want to help you make the right legal decisions.

We strive to help you make confident insurance and legal decisions. Finding trusted and reliable insurance quotes and legal advice should be easy. This doesn’t influence our content. Our opinions are our own.

Get Legal Help Today

Compare Quotes From Top Companies and Save

secured lock Secured with SHA-256 Encryption

How do you dissolve a business partnership when you have no formal partnership agreement, just a business lease agreement that will expire soon?

There are 4 partners in this retail business, 2 which run the business and 2 silent partners. The business lease will expire in a year and the only contractual signed agreement between the partners was the business lease (there was no partnership agreement created). What step would you take to disolve the partnership or buyout the other partners, as one of the partners who is currently running the business, wants to open the same type of business but without the 2 silent partners.

Asked on July 16, 2012 under Business Law, California


Cameron Norris, Esq. / Law Office of Gary W. Norris

Answered 10 years ago | Contributor

Technically the loss of any one partner is a dissolution of the partnership.  No term was specified by the partners but a court would imply a one year term (the lease) followed by an at will term.  Any partner can leave the partnership within the first year wrongfully, or after the one year term (not wrongfully).  You should all wait until the one year term expires, divide profits and capital according to contributions, dissolve the partnership--and have whoever wants to start an new partnership do so.

I would get a written agreement between the parties in regards to the dissolution of the partnership and that writing should state the value of the business, the individual shares of the partners and their payouts at the winding up of the business.  Any other agreements to buy one another out and keep equipment, start a new partnership without the silent partners, etc. should be separate. 

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

secured lock Secured with SHA-256 Encryption