Dissolution by illegality of partnership PA 1890 s. 34
PA 1890 s. 34: A partnership is dissolved when any event makes it unlawful to carry on the firm's business or for the partners to continue in partnership.
A partnership is in every case dissolved by the happening of any event which makes it unlawful for the business of the firm to be carried on or for the members of the firm to carry it on in partnership.
Text in force at .
Source: legislation.gov.uk — The National Archives (legislation.gov.uk), reproduced under licence Open Government Licence v3.0.
What it actually says
This section says that a partnership is automatically dissolved the moment it becomes unlawful to carry on the firm's business, or for the partners to carry it on together. The dissolution happens by operation of law, not by a decision of the partners or a court.
For example, if a new law bans the type of business the firm is in, or if a partner becomes subject to a restriction that makes it unlawful for them to be a partner, the partnership ends immediately. The dissolution is not optional; it is compulsory and automatic.
When it applies
- A partnership operates a business that is later made illegal by a new statute, such as a ban on certain trading activities.
- A partner is a professional, such as a solicitor or doctor, and a new regulation prohibits them from practising in partnership with others.
- A partnership's business requires a licence, and the licence is revoked, making the continuation of the business unlawful.
- The firm imports goods that are later classified as prohibited under a new law, making the importation illegal.
What this section does not say
- This provision does not cover dissolution caused by the death or bankruptcy of a partner (see s.33).
- It does not cover dissolution by notice or by expiration of the term agreed between the partners (see s.32).
- It does not cover dissolution by court order on grounds such as a partner's misconduct or incapacity (see s.35).
- It does not cover situations where the business becomes merely unprofitable or where the partners disagree on business strategy.
That's the law. Now let's settle your problem.
Say what is happening. A neutral mediator hears your side and the other party's, and walks you both to a written agreement. In the advanced settings you can ask for the decision to be reasoned on the Acts of Parliament that apply in England and Wales.
Or open a session directly and invite the other party.
We copy this text from the official publisher and re-check it against that source on every page load, but we cannot guarantee it is complete, current or free of error, and we accept no liability for any reliance on it. An amendment can take effect before a consolidation catches up. The publisher's own copy is linked below; where the two differ, it is the official one that counts.
This page reproduces the text of PA 1890 s. 34 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.