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Can You Sue a Dissolved Partnership?

January 29, 2015 General

Can a General Partnership Be Sued after it Has Been Legally Dissolved?

If you are a partner in a general partnership, and the business fails, or if you entered into a contract with a general partnership that has been dissolved, you may have concerns about whether partners to a general partnership can still be liable for its debts after it has been legally dissolved.

Under the law, the partners in a general partnership can be held individually liable for the debts of the partnership. If any of the partners, or the partnership as a whole, entered into a legally binding agreement, or breached the terms of a valid agreement, the partnership can still be liable, even if it has been dissolved according to the terms of statute, absent provisions in the contract that absolve the partnership from liability in the event of dissolution.

In a general partnership, each partner assumes joint and several liability for the obligations of the partnership. This means that each partner can be separately liable for the entire amount of a debt, or may be share liability with other partners. When a general partnership is named as a defendant in a lawsuit, the plaintiff can choose to seek recovery from both partnership assets and the personal assets of each partner. Though a partnership may cease to exist after dissolution, all partners remain severally liable for the debts of the partnership.

Typically, as part of the dissolution process, the partnership must inform all customers and creditors that the partnership is being legally terminated. This puts parties on notice, so that legal action can be taken to protect their interests.

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