Dissolving a Partnership in Ontario

May 27

Dissolving a Partnership in Ontario

Please note that the information provided herein is not legal advice and is provided for informational and educational purposes only. If you need legal advice with respect to dissolving a partnership, you should seek professional assistance (e.g. make a post on Dynamic Lawyers). We have Toronto and Ottawa business lawyers registered on the website who can answer your questions or help you with your partnership dissolution.

The Ontario Partnerships Act contains various provisions dealing with circumstances in which a partnership can end.

First, a partnership can end by notice or by a contractual term in the partnership agreement: ss. 26 and 32.

Second, a partnership can terminate by death, insolvency, charge on a partner’s share or illegality of business: ss. 33 and 34.

Third, a partnership can be terminated by court order: s. 35. This method of dissolving a partnership requires that an application be brought for one of the following reasons:

one of the partners is found to be mentally incompetent;
one of the partners becomes permanently incapable of performing his or her part of the partnership;
one the partners has been guilty of conduct that prejudicially affects the carrying on of the business;
one of the partners willfully or persistently permits a breach of the partnership agreement or otherwise so conducts him or herself in a manner relating to partnership business that it is not reasonably practicable for the other partners to carry on the business partnership with him or her;
when the business of the partnership can only be carried on at loss; or
when in any circumstances have arisen that in the opinion of the court render it “just and equitable that the partnership be dissolved”.

In conclusion: a partnership can only be terminated according to the terms and conditions of the partnership agreement and under one of the provisions of the Partnerships Act.