PARTNERSHIP OPERATION AND TERMINATION. Business & Marketing Term Paper

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Date
Instructor’s Name
Course
PARTNERSHIP OPERATION AND TERMINATION
PARTNERSHIP OPERATION AND TERMINATION
* Introduction
The process of dissolving a partnership by one partner without the engagement of the other is usually a major challenge in the US and is also against the law. Before the dissolution is enacted there are various steps that should be followed by the partnering parties. The partners should be able to; review the terms and conditions of their partnership, engage all partners in the discussion of all the decisions regarding the dissolution of the partnership, file a dissolution form, ensure that all partners are notified and all accounts settled and closed. In this study, the major focus is on the dissolution of the partnership without engaging the other party. This study analyzes the position of the business law in the US, regarding the process of taking exclusive possession of the properties or profits of a business in partnerships. This study will analyze the position of the Uniform Partnership Act (UPA), on whether a partnership should be considered dissolved or not through the decision of one partner. The other section of the study includes; the analysis of what the partnership agreement says about the shared property or the profits, especially on the ownership interest. This study will review the case of Cline v. Grelock, C.A. No. 4046-VCN, 2010 WL 761142 (Del. Ch. March 2, 2010), where Grelock unilaterally dissolved the LLC, where he went ahead to form a new LLC with his wife, providing the same towing and recovery services. This study will examine what the UPA says regarding property rights and whether a partner can dissolve a partnership without the approval of the other, before its expiry.
* Literature Review
Chapter 37 of Business Law defines a partnership as “an associationbetween two or more persons to carry on a business for a profit”. According to the text, partners have joint control over the operations of the business and have the right to share the profits generated from the business. The Uniform Partnership Act (UPA) is a doctrine that guides and also governs the partnership and is used and adopted by many states across the US. The UPA is only effective if, partners shave not been able to draft and implement their agreement document, but the partners have agreed on the terms that they will use for the business (Clarkson & Miller, p. 705). In the US, the partners are usually supposed to become an agent of the other partner, as per the directive by the Agency Concepts and Partnership Law. The guidelines on how profits and losses shall be shared, as well as the generation and the contribution of the necessary funds, skills, labor, and assets by the partners, is defined by the Agency Concepts and Partnership Law. For any partnership to be effective, various elements should be considered, as per the directives of the UPA. The basic elements of any partnership in the US are founded on factors such as; the sharing of profits and losses, Joint ownership of the business by the engaging partners, and also an equal right to be involved in the management of the business, for all partners (Birkeland & Postlewaite, p.713). The partnership agreement is an important document in the establishment of any partnership since it helps in the process of setting the rules, regulations, and roles of each partner.
The partnership agreement can either be oral, written, or implied by conduct, as per the understanding of each partner involved. According to Chapter 37, every partner has their rights in the partnership which should be respected. Partners have an equal right to the management of the partnership; where under the UPA guidelines, every partner should get one vote, with a majority win (Birkeland & Postlewaite, p.335). There should be a unanimous agreement from all the partners when addressing some issues regarding the partnership. The interests of the partners are equal and should be safeguarded. Under the UPA guidelines, all the partners have an equal entitlement to the business losses and profits where the partners did not have a written agreement. However, where partners had agreed on the procedure of sharing losses and profits, through a written document, all parties should get their adequate share. All partners should have an equal share of compensation or have an adequate share of compensation, about the books and records (Talus, p.54). All the partners have an equal right of accessing the financial records of the business without bias, while the partners’ shares should only be determined through the accounting of Partnership Assets and Profits. If partners purchase a certain property or asset, it shall and should remain as an asset of the sharing partners and not a property of any individual. Under the UPA 501 guideline, no individual is supposed to sell, mortgage, or even transfer the properties and assets of the partnership. Whilst partner cans possess an asset on behalf of the partnership, the partner when the partner is in debt, they cannot use the assets of the partnership to benefit their needs.
* Data Collection
The process of enacting a partnership dissolution and termination should be base on the understanding of all the partners. All partners should be able to agree on the ways of dissolving the partnership, how to share the existing assets, profits, and shares, and the closure of all the existing accounts. Data shall be obtained through the quantitative research methods, where journals, books, and websites with information regarding partnership dissolution and termination shall be used. This study focuses on the American Business Law, reviewing most of the chapter which addresses the issue of partnerships and how they should be dissolved, the rights and responsibilities of partners, and whether partners can dissolve partnerships without involving the other partners. This study also reviews the Uniform Partnership Act (UPA) by reviewing the case Cline v. Grelock, C.A. No. 4046-VCN, 2010 WL 761142 (Del. Ch. March 2, 2010), by looking at the legal obligations of each partner, and the general process of dissolving and winding up a partnership under the UPA.
* Case study
This study reviews the case of Cline v. Grelock, C.A. No. 4046-VCN, 2010 WL 761142 (Del. Ch. March 2, 2010), where the relationship between Cline and Grelock, who were the co-owners of the Delaware LLC, which did not last for long after the deterioration of their friendship, thereby, leading to the dissolution of the partnership (Miller, p.98). According to the case presented in court, the two co-founders of the par...