Brief Fact Summary. Plaintiff and Defendant were brothers who ran a linen supply business. After years of losses, Plaintiff wanted to dissolve the business just as it became profitable.
Synopsis of Rule of Law. Unless specified, a partnership may be dissolved at will by any partner providing the partner is exercising good faith.
Even though a partner has a right to dissolve the partnership, if, however, it is proved that the partner acted in bad faith and violated his fiduciary duties by attempting to appropriate to his own use the new prosperity of the partnership without adequate compensation to his co-partner, the dissolution would be wrongful and the partner would be liable as provided by the section of the Uniform Partnership Act defining the rights of partners upon wrongful dissolution for violation of the implied agreement not to exclude the other partner wrongfully from the partnership business opportunity.View Full Point of Law
Issue. The issue is whether the partnership is for a term (in this case as long as it takes to recoup their investments) or whether it is a partnership at will.
Held. A partnership can be dissolved by the express will of any partner providing that the partner making a good faith judgment. Although factors may exist that would indicate that the parties meant to have a partnership for a certain term, those factors did not exist in this case. However, Plaintiff could not dissolve the partnership in order to enrich himself at the expense of the partnership.
Discussion. This case follows the Uniform Partnership Act which allows for a dissolution at will unless stipulated in the agreement. This holding would seemingly be in contrast to the holding in Collins v. Lewis. However, a partner’s obligation to operate in good faith overrides their freedom to dissolve the partnership.