What happens to a partnership if one partner leaves?

In the case of a partnership, the departure of one partner typically results in the automatic dissolution of the partnership, unless otherwise specified in the partnership agreement. This is due to the fundamental nature of a partnership, which is based on mutual consent and participation of all partners in the business. The agreement should ideally outline the terms for such a situation; however, in the absence of such provisions, the default legal position is that the partnership is dissolved.

When a partner leaves, this often puts an end to the existing partnership arrangement, prompting the remaining partners to either form a new partnership or follow the terms laid out in their partnership agreement regarding continuation after the departure. The intention behind this principle is to protect the interests of all parties involved, as the relationship dynamic and agreed-upon contributions can vastly change when one partner exits.

Considering the various alternatives, it’s clear that the dissolution is not just a procedural step but a significant aspect of partnership law, which governs how partners relate to each other and to the business itself.