A partnership may be dissolved by mutual consent, by expiration of predetermined time, by death of one of the partners, by insanity, by the bankruptcy of either partner, or by the court for any good cause, such as dishonesty of one partner against the rest, or incapacity caused by habitual drunkenness or conviction of any crime. A partner may withdraw at any time if no time for the continuation of the partnership is mentioned in the articles of agreement, but he must give due notice of his intention to the other partners. If the time for the continuance of the partnership is mentioned, a partner can nevertheless withdraw at any time, but he is responsible to the firm for damages caused by the breach of his promise. If a partner dies the surviving partners alone have the right to settle up the business. To his heirs and legal representatives they need only to render an account of the business.
Notice To Be Given
Upon the dissolution of a partnership by mutual consent it should be indorsed on the articles of copartnership and a notice given in some prominent newspaper. Special notice should also be sent to each one of the creditors of the firm.
Authority of Partners- As a general rule the whole firm and each member of it is bound by the acts and contracts of one partner, because in law the act or contract of one is regarded as the act of all. Each is regarded as the agent of all without any express authority being given. Thus, loans, purchases, sales, assignments, pledges, or mortgages effected by one partner on the partnership account, and with good faith in the third party, are binding on all the firm. So is also release by one a release; notice to one is notice to all; demand of one is demand of all. In matters, however, not connected with the partnership, but intended for his own personal interests, the firm is not bound.
Liability Of The Several Partners
For the payment of partnership debts the property of the firm, both real and personal, as also that of each individual partner, is held responsible for amount of the unpaid partnership debt.
Individual Debts Of Partners
A partner having individual debts makes the firm liable for such debts for his interest in the firm after the firm debts are deducted, the firm liabilities always having precedence.
Liabilities Of A New Partner
A new partner entering a firm cannot be held for firm debts contracted previous to his admission.
Sale Of Partner’s Interest
An assignment of interest by one partner must be assented to by the other partner or partners.
Source: The Business Man’s Encyclopedia, The System Company of Chicago (1905).