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Publication Title

Washington University Law Quarterly

Abstract

The National Conference of Commissioners on Uniform State Laws has decided to revise the Uniform Partnership Act (U.P.A.). Therefore, the time is ripe for reexamination of this venerable uniform law. This Article will recommend reform of one of the most distinctive features of general partnership under the U.P.A.-the easy dissolvability of the partnership entity. Because I intend to propose specific statutory provisions rather than merely to describe the relevant policy considerations, Part II begins with an analysis of the role and general approach of the partnership statute. Part III defines the problem of permitting partner "dissociation" and identifies some possible statutory approaches, including transfer of interests, buyout, liquidation and dissolution. Part IV describes the U.P.A. dissolution provisions in the context of the alternative approaches to partner dissociation. Part V analyzes the costs and benefits of the various statutory approaches to partner dissociation identified in Part III. Part V concludes, in light of the costs of illiquidity, that the parties would prefer a standard form that provides for partner dissociation at will to one that does not. However, the power to dissociate at will should be designed to minimize such costs of high liquidity as opportunistic conduct by dissociating partners and as disruption of the going concern. Parts VI and VII discuss how the statute should deal with partner dissociation in the face of relevant provisions in the partnership agreement. Part VIII summarizes my findings in the form of proposed statutory provisions concerning partner dissociation. The proposed statute embodies a "scalpel" approach that better balances the costs and benefits of partner dissociation than does the U.P.A. "dynamite" approach of dissolution at will.

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