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How to write your Partnership Dissolution Agreement
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Use cases for this template
A startup's orderly wind-down after a strategic pivot
The Challenge
Sable Robotics LLC and NovaWare Partners had a partnership agreement that no longer fit their strategy, and as the partnership dissolves they faced disputes about partnership assets, existing contracts, equity distribution, and debts; with a near-term dissolution date, the business partners needed a plan that would facilitate transparency, coordinate access to records at reasonable times, and avoid legal proceedings while keeping clients and creditors satisfied.
The Solution
Using the legal contract template as their core, they used Proposal Kit to produce supporting documents: a winding-up plan, a communications strategy for customers and vendors, draft public notices, and an inventory report; automated line-item quoting modeled the distribution of proceeds, profits, and contributions, and the AI Writer generated summaries, checklists, and FAQs tailored to their specific needs, giving assurances to stakeholders and clarifying intent and intention without altering the contract itself.
The Implementation
They appointed a liquidating partner to act on behalf of both parties, negotiated ground rules at the beginning, consulted advisors, and coordinated filings with the state's office and federal tax agencies, plus a local newspaper notice; Proposal Kit helped form letters, counterparts, and schedules that outlined who would fulfill duties, which assets would be liquidated or transferred, and which actions were permitted versus illegal, while they examined accounts, validated assignments, and presented options to resolve conflicts.
The Outcome
Debts were fulfilled, offices were closed or reassigned, assets were liquidated, and proceeds were carried to each party per Exhibit A. Disputes were resolved without court, and the remaining partners moved forward in peace with a clear record of decisions and the validity of the process documented.
A limited partnership navigates disability and closure
The Challenge
At Lumina & Finch LLP, a limited partnership, a key partner suffered a disability and another partners retired, creating urgency to decide roles, extend client support for a short period, and manage leases, vendors, and agency notifications while keeping clauses from becoming invalid or unenforceable and ensuring the nature and value of assets were fairly reflected.
The Solution
They kept the legal agreement intact and used Proposal Kit's templates to draft a dissolution checklist, stakeholder briefings, lease assignment memos, and a certificate filing guide; the AI Writer produced client transition letters and a plan to fulfill obligations at reasonable times, and line-item quoting illustrated equitable distribution scenarios so everyone could discuss, negotiate, and align on proceeds and future commitments.
The Implementation
Working as a single team, they coordinated filings with a county recording officer and the state's office, published a public notice, examined accounts, documented contributions, and used the Proposal Kit to assemble counterparts, timelines, and form communications that clarified who was involved, what actions were deemed essential, and how responsibilities would be carried through completion.
The Outcome
Legal proceedings were avoided, profits and equity distributions were accepted as fair, creditors were satisfied, customers experienced a smooth transition, and the firm wrapped up with transparency, proper certificates filed, and a clear record that protected the validity of the decisions.
A family restaurant chooses buyout over liquidation
The Challenge
Harbor Spoon Partners, founded by Rhea Gomez and Caleb North, reached a crossroads over the future of the venture as one favored liquidation and the other a buyout; tensions rose over valuation, proceeds, and who the departing partner would be, and both sides needed a process that would protect relationships and keep service promises fulfilled.
The Solution
They retained their dissolution contract framework but used Proposal Kit to create supporting analyses: an AI Writer-generated valuation summary and buyer outreach brief, a customer communication plan, and a transition strategy for staff; automated line-item quoting compared scenarios for partners to sell versus buyout so the parties could examine outcomes, assess equity distribution, and attempt a solution aligned with their intent.
The Implementation
Meeting at reasonable times, they consulted their accountant, coordinated access to financials, drafted counterparts for signature, and prepared agency notices that would apply only if the entity was liquidated; Proposal Kit's document assembly helped present options clearly, highlight crucial aspects and risks, and ensure actions taken on behalf of the entity were documented and permissible.
The Outcome
They decided on a buyout, the remaining partners continued operations, the departing partner exited with agreed proceeds, customers stayed engaged, and peace returned to the team as the plan's strategies were carried out and the relationship concluded on resolved terms.
Abstract
This partnership termination agreement outlines how two or more partners end their business relationship and wind up their affairs. It sets an effective date for the dissolution process, directs the parties to stop the Services, and establishes a plan to transfer property, records, and existing contracts. The agreement includes procedures for handling partnership assets and remaining assets, ensuring transparency while the partners coordinate the completion of transactions with clients, customers, and creditors.
Termination obligations require the Company to deliver all materials under its control that belong to the other party, inform the other party about any lost items, and cooperate to assign or transfer third-party interests. This helps protect value and facilitates an orderly winding up. To the extent permitted, partners agree how to continue selling any existing product or service and how payment and income will be distributed under Exhibit A. Neither party may continue development, reverse engineer, or decompile co-produced work, which helps avoid disputes over intellectual property.
Ownership clauses separate the Company's Materials from the Partner's Materials and grant reciprocal licenses for specified purposes. Mutual confidentiality duties survive the dissolution of a partnership, safeguarding trade secrets and sensitive accounts. The equipment and expenses sections clarify responsibilities for returning assets and state that no reimbursements are due unless Exhibit B says otherwise.
A mutual release and hold harmless provision settles prior understandings and claims, while an attorneys' fees clause encourages efficient solutions if conflicts arise. The agreement supersedes oral agreements and earlier documents; amendments must be in writing. Binding effect, governing law, county venue, waiver, good faith, and assignment provisions establish the legal framework for completion.
Outside the four corners of such an agreement, a dissolved partnership may need to inform the state's office, federal tax agencies, and business registrations. Depending on the entity and circumstances, partners might publish a public notice in a local newspaper, file a certificate with a county recording officer, or execute instruments to settle leases and other obligations. Example situations include when one partner retires or faces disability, a limited partnership ends a venture, or a firm confronts bankruptcy or irreconcilable challenges.
Proposal Kit can help teams establish and document this process. Its document assembly, automated line-item quoting, AI Writer for supporting documents, and extensive template library help businesses deliver tailored, equitable agreements and related materials with speed and ease.
Beyond the wind-up mechanics, a strong partnership agreement should map the partnership dissolution process from the beginning to the dissolution date so business partners know who decides what, at what reasonable times, and on whose behalf. When a partnership dissolves, it helps to define whether a departing partner or a designated liquidating partner will coordinate liquidation, examine accounts, and facilitate the distribution of proceeds, profits, equity, and remaining assets. Clear communication strategies and assurances to creditors are vital so debts are fulfilled, offices are vacated or reassigned, and access to records is coordinated. If partners sell existing inventory or licenses, the agreement should outline how proceeds are carried and allocated, reflecting contributions and the nature of the venture.
The agreement can also state the parties' intent and intention to negotiate in good faith to resolve disputes and avoid legal proceedings, with an attempt to discuss and have issues resolved before escalation. If any clause is deemed invalid or unenforceable, a severability concept helps preserve the validity of the remaining clauses, and counterparts allow execution in separate signature pages. Provisions can extend to agency limits after termination, actions taken on behalf of the entity, and what is permitted versus illegal.
It is important to set how assignments are handled, how liquidation is managed if one partner retires or partners enter new obligations, and how future obligations are addressed if a partner is liquidated or partners retire from active roles. Where specific needs are involved, consult advisors to examine the facts, present options, decide on equitable distribution, and ensure counterpart notices are delivered in proper form so all parties are satisfied.
Proposal Kit helps a team assemble these documents efficiently. Use its template library and document assembly to build the dissolution plan, exhibits, and related instruments; apply automated line-item quoting to model the distribution of proceeds, contributions, and debts; and use the AI Writer to generate supporting summaries, checklists, and communications tailored to your situation.
Another dimension to plan is governance during the wind-down. When a partner retires or exits abruptly, appoint a dissolution coordinator to act on behalf of the remaining partners and keep decisions moving. Leading practices include a milestone calendar, a transition checklist, and a single point of contact for customer and vendor communication so service obligations are fulfilled without disruption.
Address operational topics such as records retention, access revocation, asset inventories, and closing bank accounts, and document who will handle support questions for a limited period. It is crucial to define signatory authority, reconcile intercompany charges, and align final accounting so each side can fulfill duties and move on in peace. These steps help preserve value and relationships while making the process predictable and fair.
Proposal Kit supports this planning by helping teams outline roles, schedule tasks, and assemble consistent notices and exhibits that reflect the parties' specific needs, giving remaining partners a clear, organized path through completion.
Writing the Partnership Dissolution Agreement document - The Narrative
PARTNERSHIP DISSOLUTION AGREEMENT
THIS AGREEMENT is made this Current Day day of Current Month, Current Year by and between Company Name ("Company") and Company Name ("Partner").
In consideration of the mutual covenants set forth in this Agreement, Partner and Company hereby agree to cancel any and all partnership, revenue sharing, work, projects, or labor as follows:
Dissolution of Partnership
Company and Partner shall cease any and all services described below (the "Services" or "Work Product"), as well as any additional services that Partner has requested.
Services include, but are not limited to:
Enter Service or Work Product Description here.
Termination Obligations
Upon termination of this Agreement, Company shall transfer and make available to Partner all property and materials in Company's possession or subject to Company's control that are the rightful property of Partner. The Company shall make every reasonable effort to secure all written or descriptive matter that pertains to the Services or Work Product and agrees to provide reasonable cooperation to arrange for the transfer of all property, contracts, agreements, supplies, and other third party interests, including those not then utilized, and all rights and claims thereto and therein. In the event of loss or destruction of any such material or descriptive matter, Company shall immediately notify Partner of the details of the loss or destruction in writing and provide the necessary information for a loss statement or other documentation to Partner.
1 Survivability of Products and Compensation
Upon termination of this Agreement, each party shall continue to have the following rights to distribute any existing product / service through their normal sales channels and according to the compensation provisions set forth in Exhibit A. Neither party will have any right to decompile, copy, reverse engineer, or otherwise continue development on the Co-produced Product(s). Insert additional language concerning the sale of existing products or service born out of the partnership.
Ownership Rights
1 Company's Rights:
The Company shall have ownership of all Company's Materials.
Company's Materials consist of all copyrightable:
Materials that do not constitute Services or Work Product (as defined in Section 1, Services and Exhibit B, Specifications). Materials that are solely owned by Company or licensed to Company. Materials that are incorporated into the Work Product or a part of the Services.
Additional materials shall include, but are not limited to:
Insert description of additional materials here. Company shall hold all right, title, and interest in and to Company's Materials. Partner shall not do anything that may infringe upon or in any way undermine Company's right, title, and interest in the Company's Materials, as described in this section 3 Notwithstanding the above, Company hereby grants Partner an unrestricted, nonexclusive, perpetual, fully paid-up worldwide license for the use or for the sublicense of the use of Company's Materials for the purpose of.
Insert purpose of the use of Company's Materials here.
2 Partner's Rights:
The Partner shall have ownership to all Partner's Materials.
Partner's Materials consist of all copyrightable:
Materials that do not constitute Services or Work Product (as defined in Section 1, Services and Exhibit B, Specifications). Materials that are solely owned by Partner or licensed to Partner. Materials that are incorporated into the Work Product or a part of the Services.
Additional materials shall include, but are not limited to:
Insert description of additional materials here. Partner shall hold all right, title, and interest in and to Partner's Materials. Company shall not do anything that may infringe upon or in any way undermine Partner's right, title, and interest in the Partner's Material, as described in this section 3 Notwithstanding the above, Partner hereby grants Company an unrestricted, nonexclusive, perpetual, fully paid-up worldwide license for the use or for the sublicense of the use of Partner's Materials for the purpose of. Insert purpose of the use of Partner's Materials here.
Outstanding Final Compensation and Hold Harmless Agreements. For all of Company's services rendered to Partner, or vice versa, under any Previous Agreement, the party owing monies shall compensate the owed party, in cash, pursuant to the terms of Exhibit A attached hereto. By accepting the terms of this offer and signing in the space provided below, each party hereby releases and forever discharges and holds one another, its successors, employers, employees, agents, officers, directors, shareholders, affiliates, and insurers harmless of all claims, suits or liability, directly or indirectly related to employment, retainment of services or the termination of such services, and specifically and without limitation any claims to pay in lieu of notice, wrongful dismissal, severance, vacation, bonus, or overtime pay.
This release includes, but is not limited to, all contract and tort claims between Partner and Company concerning either party's right to terminate its employees, contractors, and vendor agreements and claims or rights under local, state, and federal laws prohibiting employment discrimination. By signing below, both parties agree that these terms represent a full and final settlement of any and all claims either party may have arising out of any previous contracts or arrangements, monies owed, or any other obligations required to be met by either party.
Mutual Confidentiality
Partner and Company acknowledge and agree that the Specifications and all other documents and information related to the performance, production, creation or any expression of the services or work product are the property of Partner. Materials provided between Company and Partner (the "Confidential Information") including, but not limited to, documentation, product specifications, drawings, pictures, photographs, charts, correspondence, supplier lists, financial reports, analyses, and other furnished property shall be the exclusive property of the respected owner (the "Owning Party") and will constitute valuable trade secrets. Both parties shall continue to keep the Confidential Information in confidence and shall not, at any time during or after the term of this Agreement, without prior written consent from the owning party, disclose or otherwise make available to anyone, either directly or indirectly, all or any part of the Confidential Information.
Excluded from the "Confidential Information" definition is anything that can be seen by the public or had been previously made available by the owning party in a public venue.
Equipment
If Partner has made available to Company, for Company's use in performing the services for Partner, such items of hardware and software as Partner and Company may agree are reasonably necessary for such purpose, Company is obligated to return all Partner's property currently in its possession at a time and place of Partner's choice. The following equipment has been made available to Company and is hereby required to be returned to Partner.
Expenses
Neither party will be reimbursed for any expenses incurred in connection with the Services or Work Product, whether direct or indirect, unless otherwise written in Exhibit B.
General Provisions
1 Entire Agreement
This Agreement contains the entire Agreement between the parties relating to the subject matter hereof and supersedes any and all prior agreements or understandings, written or oral, between the parties related to the subject matter hereof. No modification of this Agreement shall be valid unless made in writing and signed by both of the parties hereto.
2 Governing Law
This Agreement shall be governed by and construed in accordance with the laws of the State of State. Exclusive jurisdiction and venue shall be in the County County, State Superior Court.
3 Binding Effect
This Agreement shall be binding upon and inure to the benefit of Partner and Company and their respective successors and assigns, provided that Company may not assign any of its obligations under this Agreement without Partner's prior written consent.
4 Waiver
The waiver by either party of any breach or failure to enforce any of the terms and conditions of this Agreement at any time shall not in any way affect, limit, or waive such party's right thereafter to enforce and compel strict compliance with every term and condition of this Agreement.
5 Good Faith
Each party represents and warrants to the other that such party has acted in good faith, and agrees to continue to so act, in the negotiation, execution, delivery, performance, and any termination of this Agreement.
6 No Right to Assign
Company has no right to assign, sell, modify or otherwise alter this Agreement, except upon the express written advance approval of Partner, which consent can be withheld for any reason. Partner may freely assign its rights and obligations under this Agreement.
7 Attorney's Fees
In the event any party to this Agreement employs an attorney to enforce any of the terms of the Agreement, the prevailing party shall be entitled to recover its actual attorney's fees and costs, including expert witness fees. Both parties represent and warrant that, on the date first written below, that they are authorized to enter into this Agreement in entirety and duly bind their respective principals by their signature below.
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Frequently Asked Questions
How do I customize this contract to fit my business needs?
Customizing this contract involves editing the document to include your business details, terms, and conditions. The templates are designed to be flexible, allowing you to insert your company's name, address, and other relevant information. You can modify clauses to reflect your unique business practices and legal requirements.
Is this contract compliant with laws and regulations?
The legal contract templates are written by legal professionals and designed to comply with current laws and regulations at the time of their writing. However, laws can vary by jurisdiction and change over time, so it's recommended to have your contract reviewed by a local attorney to ensure it meets all legal requirements specific to your region and industry. Templates are licensed as self-help information and not as legal advice.
Can I use the same contract for different clients or projects?
You can use the same contract for different clients or projects. The templates are versatile and easily adapted for various scenarios. You will need to update specific details such as client names, project descriptions, and any unique terms for each new agreement to ensure that each contract accurately reflects the particulars of the individual client or project.
What should I do if I encounter a clause or term I don't understand?
If you encounter a clause or term in the contract that you need help understanding, you can refer to guidance notes explaining each section's purpose and use. For more complex or unclear terms, it's advisable to consult with a legal professional who can explain the clause and help you determine if any modifications are necessary to suit your specific needs.
How do I ensure that the contract is legally binding and enforceable?
To ensure that the contract is legally binding and enforceable, follow these steps:
- Complete all relevant sections: Make sure all blanks are filled in with accurate information.
- Include all necessary terms and conditions: Ensure that all essential elements, such as payment terms, deliverables, timelines, and responsibilities, are clearly defined.
- Signatures: Both parties must sign the contract, and it is often recommended that the contract be witnessed or notarized, depending on the legal requirements in your jurisdiction.
- Consult a legal professional: Before finalizing the contract, have it reviewed by an attorney to ensure it complies with applicable laws and protects your interests.
Ian Lauder has been helping businesses write their proposals and contracts for two decades. Ian is the owner and founder of Proposal Kit, one of the original sources of business proposal and contract software products started in 1997.By Ian Lauder
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Proposal Kit, Inc. makes no warranty and accepts no responsibility for the suitability of any materials to the licensee's business. Proposal Kit, Inc. assumes no responsibility or liability for errors or inaccuracies. Licensee accepts all responsibility for the results obtained. The information included is not legal advice. Names in use cases have been fictionalized. Your use of the contract template and any purchased packages constitutes acceptance and understanding of these disclaimers and terms and conditions.
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