Court may dissolve partnership under PA 1890 s. 35 for: partner's incapacity, prejudicial conduct, breach, trading at a loss, or just and equitable.
Official text
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PA 1890 s. 35 — United Kingdom
On application by a partner the Court may decree a dissolution of the partnership in any of the following cases: When a partner is found lunatic by inquisition, or in Scotland by cognition, or is shown to the satisfaction of the Court to be of permanently unsound mind, in either of which cases the application may be made as well on behalf of that partner by his committee or next friend or person having title to intervene as by any other partner: When a partner has a mental disorder within the meaning of section 328 of the Mental Health (Care and Treatment) (Scotland) Act 2003 or section 305 of the Mental Capacity Act (Northern Ireland) 2016 (as the case may be): When a partner, other than the partner suing, becomes in any other way permanently incapable of performing his part of the partnership contract: When a partner, other than the partner suing, has been guilty of such conduct as, in the opinion of the Court, regard being had to the nature of the business, is calculated to prejudicially affect the carrying on of the business: When a partner, other than the partner suing, wilfully or persistently commits a breach of the partnership agreement, or otherwise so conducts himself in matters relating to the partnership business that it is not reasonably practicable for the other partner or partners to carry on the business in partnership with him: When the business of the partnership can only be carried on at a loss: Whenever in any case circumstances have arisen which, in the opinion of the Court, render it just and equitable that the partnership be dissolved.
Section 35 is the route out when notice is not available - typically a fixed-term partnership, or one where the agreement excludes dissolution at will. On the application of a partner, the court may decree a dissolution in seven listed cases.
The first three concern incapacity: a partner of permanently unsound mind, a partner with a mental disorder within the meaning of the specified legislation, and a partner other than the applicant who has become in any other way permanently incapable of performing his part of the partnership contract. Note the qualification "other than the partner suing" in paragraph (c) - and its absence in the first paragraph, where the application may be made on behalf of the incapable partner.
The next two concern behaviour, and are the ones most often relied on. Paragraph (d) covers a partner other than the applicant guilty of conduct which, regard being had to the nature of the business, is calculated to prejudicially affect the carrying on of the business - conduct outside the firm can qualify where it damages the business. Paragraph (e) covers a partner who wilfully or persistently commits a breach of the partnership agreement, or otherwise so conducts himself in matters relating to the partnership business that it is not reasonably practicable for the others to carry on in partnership with him. Paragraph (f) allows dissolution where the business can only be carried on at a loss. Paragraph (g) is the sweep-up: whenever circumstances have arisen which, in the opinion of the court, render it just and equitable that the partnership be dissolved. A partner cannot rely on his own misconduct, which is why the exclusion of "the partner suing" appears in most of the paragraphs.
When it applies
A fixed-term partnership where the relationship has broken down completely.
A partner who has repeatedly breached the agreement and will not stop.
A partner whose conduct outside the business is damaging its reputation.
A firm that has been loss-making for years with no prospect of recovery.
A partner who has become permanently unable to work in the business.
What this section does not say
×It does not let a partner rely on his own misconduct. Most paragraphs are expressly limited to a partner "other than the partner suing".
×It is not needed for a partnership at will. There, any partner may dissolve by notice under sections 26 and 32.
×It does not provide for expulsion. Removing a partner while the firm continues requires an express power - see section 25.
×It does not decide the financial outcome. Distribution on dissolution is governed by section 44 and, for an outgoing partner, sections 42 and 43.
×It is not a quick remedy. It requires an application to the court and proof of one of the listed grounds.
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
Two people agreed a ten-year term. One has stopped attending, has twice taken money out of the business account for personal use, and refuses to agree to end the partnership.
How the wording applies
A fixed term takes the firm outside the notice route, so section 35 is the way out and it requires one of the listed grounds. Paragraph (e) covers a partner who wilfully or persistently commits a breach of the partnership agreement, and paragraph (f) the just and equitable ground. The fact that shapes the application is the qualification running through most paragraphs - they are limited to a partner 'other than the partner suing', so the applicant cannot rely on their own conduct.
How the parties settled it
They agree a dissolution date by consent, repayment of the drawings taken personally, and a valuation of the goodwill with one partner taking over the trade and paying the other in instalments.
Illustrative example
A firm has traded at a loss for four years with no realistic prospect of recovery. One partner wants to keep going; the other wants it wound up.
How the wording applies
Paragraph (e) also covers the case where the business can only be carried on at a loss, and paragraph (f) allows dissolution where circumstances make it just and equitable. The fact that has to be established is the prospect rather than the history: past losses alone are not the ground, and the evidence needed is about whether the business can be carried on profitably at all going forward.
How the parties settled it
They agree an independent review of the accounts, with dissolution to follow if it finds no viable route to profit within twelve months, and the partner who wants to continue funding any further losses in the meantime.
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.
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. 35 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.