PA 1890 s. 32

Partnership Dissolves by Notice or Expiry: PA 1890 s. 32

A partnership dissolves on expiry of a term, completion of a venture, or by notice. Dissolution takes effect on the date stated or when notice is communicated.

Official text PA 1890 s. 32 — United Kingdom

Subject to any agreement between the partners, a partnership is dissolved— If entered into for a fixed term, by the expiration of that term: If entered into for a single adventure or undertaking, by the termination of that adventure or undertaking: If entered into for an undefined time, by any partner giving notice to the other or others of his intention to dissolve the partnership. In the last-mentioned case the partnership is dissolved as from the date mentioned in the notice as the date of dissolution, or, if no date is so mentioned, as from the date of the communication of the notice.

Text in force at .

Source: legislation.gov.uk — The National Archives (legislation.gov.uk), reproduced under licence Open Government Licence v3.0.

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What it actually says

Section 32 sets out the three ways a partnership dissolves without going to court, all of them subject to any agreement between the partners. If it was entered into for a fixed term, it dissolves when the term expires. If it was entered into for a single adventure or undertaking, it dissolves when that adventure or undertaking terminates. And if it was entered into for an undefined time, it dissolves when any partner gives notice to the others of his intention to dissolve it.

The last limb is the one that matters most in practice, and the second paragraph fixes the timing precisely: the partnership is dissolved as from the date mentioned in the notice as the date of dissolution, or, if no date is mentioned, from the date the notice is communicated. So a notice that specifies no date takes effect at once - a point worth noticing before sending an angry email.

Dissolution is not the same as the business stopping. Sections 38 to 44 govern what happens next: the partners' authority continues so far as necessary to wind up the affairs and complete unfinished transactions, the assets are applied in the order set by section 44, and an outgoing partner may be entitled under section 42 to a share of profits made after dissolution using their share of the assets. Where one partner wants a dissolution the others resist, and the partnership is not at will, the route is an application to the court under section 35. Where the partners simply carry on after a fixed term expires, section 27 presumes continuance on the old terms so far as consistent with a partnership at will.

When it applies

  • A partnership agreed for five years that has reached its end date.
  • A joint venture set up for one development that has now been completed.
  • One partner sending notice to dissolve a business run on no written terms.
  • Partners disputing the exact date the partnership ended for accounting purposes.
  • A firm that has stopped trading but whose affairs have never been wound up.

What this section does not say

  • It does not apply where the partners agreed otherwise. Every limb is subject to any agreement between them.
  • It does not let a partner in a fixed-term partnership dissolve it early by notice. That requires agreement or an order under section 35.
  • Dissolution does not end the partners' liabilities. Winding up follows under sections 38 to 44, and creditors are unaffected.
  • It does not deal with dissolution on death, bankruptcy or a charge over a partner's share, which is section 33.
  • It does not say how the assets are divided. That is section 44.

Worked examples

Invented situations, written to show how the wording bites. They are not real cases, not judgments and not precedent, and nothing here predicts what would happen in yours.

Illustrative example

One partner emails the other in January saying they want the partnership dissolved. Nothing else happens for months. The other partner now says the email achieved nothing because no date was named.

How the wording applies

The second paragraph fixes the timing precisely: dissolution takes effect from the date mentioned in the notice as the date of dissolution or, if no date is mentioned, from the date the notice is communicated. So an undated notice takes effect at once rather than not at all. The fact that then matters most is what dissolution does and does not do - the business does not stop, and sections 38 to 44 govern the winding up.

How the parties settled it

They agree the partnership dissolved on the date of the January email, that accounts are drawn to that date, and that one partner continues the trade paying the other for the assets at a valuation.

Illustrative example

A joint venture set up by two builders for a single development finishes the project. Both drift on doing occasional work together without ever formalising anything.

How the wording applies

Where a partnership is entered into for a single adventure or undertaking, it dissolves when that adventure terminates - subject, like every limb, to any agreement between the partners. The fact that decides what exists now is what they did after the development completed: continued trading together with a view of profit can form a fresh partnership at will, which ends on notice under this section rather than by completion.

How the parties settled it

They agree the original venture ended on practical completion, settle its accounts separately, and sign a short written agreement covering the continuing work with a notice period for either to stop.

Related sections

PA 1890 s. 26 Any partner may end partnership at will - PA 1890 s. 26 PA 1890 s. 35 Court may dissolve partnership, PA 1890 s. 35 PA 1890 s. 44 Creditors, advances, capital: order under PA 1890 s. 44 PA 1890 s. 33 Dissolution by bankruptcy, death, or charge - s.33 PA 1890

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This page reproduces the text of PA 1890 s. 32 in force at the date shown and explains it in general terms. It is not legal advice and takes no account of the circumstances of your case, which can change the answer completely. For a live dispute, for limitation periods, and before taking any step in court, consult a qualified lawyer in England and Wales.

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