Ending a general partnership—what is dissolution?
Ending a general partnership—what is dissolution?

The following Corporate guidance note provides comprehensive and up to date legal information covering:

  • Ending a general partnership—what is dissolution?
  • What is dissolution?
  • Technical dissolution
  • General dissolution
  • How is a general partnership dissolved?

A partnership formed under the Partnership Act 1890 (PA 1890) can be brought to end by its:

  1. dissolution, or

  2. insolvency

This practice note explains what ‘dissolution’ means in relation to a partnership.

What is dissolution?

There is no statutory definition of ‘dissolution’ in relation to a partnership but it is the term used to refer to the end of a partnership.

However, even if the dissolution of a partnership takes place:

  1. the partners in that partnership (or some of them) may continue to work together in a new partnership that takes over the business of the dissolved partnership, or

  2. the authority of each partner to bind the partnership, and the other rights and obligations of the partners, may continue as far as may be necessary to wind up the affairs of the dissolved partnership (see Practice Note: Ending a general partnership—solvent winding-up).

However, the consequences of the dissolution of a partnership depend on what category of dissolution has occurred in relation to it.

There are two distinct categories of dissolution:

  1. technical dissolution (sometimes called partial dissolution), and

  2. general dissolution

Both of these categories of dissolution occur when a partnership is solvent.

Technical dissolution

When the composition of a partnership changes, eg a partner dies or retires from a partnership or a new partner is admitted to a partnership, the partnership in existence immediately