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

Answers:

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

Answered 8 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. 


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