Dissolution of Partnership by Court Decree

1. Law
2. Georgia Code
3. Corporations, Partnerships, and Associations
4. Partnerships
5. Dissolution of Partnership by Court Decree

1. On application by or for a partner the court shall decree a dissolution whenever:
   1. A partner has been declared mentally incapacitated in any judicial proceeding or is shown to be of unsound mind;
   2. A partner becomes in any other way incapable of performing his part of the partnership contract;
   3. A partner has been guilty of such conduct as tends to affect prejudicially the carrying on of the business;
   4. A partner willfully 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 to carry on the business in partnership with him;
   5. Other circumstances render a dissolution equitable.
2. On the application of the purchaser of a partner's interest under Code Section 14-8-27, the court shall decree a dissolution:
   1. After the termination of the specified term or particular undertaking;
   2. At any time if the partnership was a partnership at will when the interest was assigned.

(Code 1981, §14-8-32, enacted by Ga. L. 1984, p. 1439, § 1.)

Code Commission notes.

- Pursuant to Code Section 28-9-5, in 1986, a misspelling in the word "willfully" in paragraph (a)(4) was corrected.

Law reviews.

- For article, "2014 Georgia Corporation and Business Organization Case Law Developments," see 20 Ga. St. B. J. 26 (April 2015).

COMMENT

Note to Uniform Partnership Act This section specifies the grounds of dissolution by decree of court.

Prior Georgia Law Paragraph (a)(1): Prior O.C.G.A. § 14-8-90 provided for dissolution in the event of a partner's "insanity" but did not require a court decree.

Paragraph (a)(2): There was no comparable provision.

Paragraphs (a)(3) and (4): Prior O.C.G.A. § 14-8-90 provided for dissolution by decree of court in the event of "misconduct of any partner," and for dissolution without a decree in the event of a partner's felony conviction.

Paragraph (a)(5): There was no comparable provision.

Subsection (b): There was no comparable provision.

Official UPA "Mentally incapacitated" has been substituted for "lunatic" in paragraph (a)(1). The former term is drawn from O.C.G.A. § 29-5-1-(1), which deals with the appointment of a guardian. Official subsection 32(1)(e), permitting dissolution solely because the business is generating losses, has been deleted. The reference to § 28 has been deleted from the official version of subsection (b) because new § 14-8-28, unlike Official § 28, does not permit a partner's creditor to foreclose on and purchase the partner's interest. Finally, "the court shall decree a dissolution" has been added as a housekeeping change to the lead-in to subsection (b).

Cross-Reference Decree of court as cause of dissolution: § 14-8-31(a)(6).

JUDICIAL DECISIONS

Trial court properly dissolved a joint venture partnership because the record clearly supported a finding that the partnership had been deadlocked and, although the joint venturers had at times sought either dissolution and liquidation or the appointment of a new manager, the parties had not been able to effectuate either alternating courses of action. Maree v. ROMAR Joint Venture, 329 Ga. App. 282, 763 S.E.2d 899 (2014), overruled on other grounds by SRM Group, Inc. v. Travelers Prop. Cas. Co. of Am., 308 Ga. 404, 841 S.E.2d 729 (2020).

Cited in Bagwell v. Trammel, 297 Ga. 873, 778 S.E.2d 173 (2015).

RESEARCH REFERENCES

Am. Jur. 2d.

- 59A Am. Jur. 2d, Partnership, § 507 et seq.

C.J.S.

- 68 C.J.S., Partnership, § 420 et seq.

ALR.

- Right of one partner to maintain action at law against the other for damages from wrongful dissolutions of firm, 4 A.L.R. 158.

Ex parte appointment of receiver for partnership, 169 A.L.R. 1127.

Appointment of receiver in proceedings arising out of dissolution of partnership or joint adventure, otherwise than by death of partner or at instance of creditor, 23 A.L.R.2d 583.

Venue of action for partnership dissolution, settlement, or accounting, 33 A.L.R.2d 914.

Inability of partnership to operate at profit as justification for court-ordered dissolution, 20 A.L.R.4th 122.

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