Legal Question in Business Law in California

Partnerships are pretty much "at will" except to the extent the partners may have an agreement calling for it to continue for a certain duration or to accomplish a particular objective, and even then, a partner can withdraw, although with potential liability to the partnership and/or the other partners. The withdrawal of a partner doesn't terminate the partnership unless the withdrawal leaves only one remaining "partner," in which case the partnership does indeed dissolve and ceases to exist except for the post-dissolution process known as "winding up" its business affairs.

Here, I assume there are only two partners, so the withdrawal of one will cause the dissolution of the partnership and trigger the winding-up process.

Note that a partner's withdrawal can be "rightful" or "wrongful" depending upon whether the withdrawal is contrary to the partnership agreement or is caused by some other improper action of that partner. A wrongful withdrawal reduces or eliminates the withdrawing partner's right to participate in the winding-up process and may result in financial liability.

Note that partnership law uses quite a few specialized terms, and it is very useful to understand what each of them means and use them correctly when discussing the process of shutting down a partnership. The terms include dissociation, withdrawal, dissolution and dissolve, wind-up, terminate, rightful, wrongful, and probably others. "Dissociation" for example, includes "withdrawal" but also includes the departure of a partner by other less-voluntary means, such as by death, bankruptcy, court order, etc.

I suggest you obtain and read California's version of the Uniform Partnership Act of 1994, which is codified in the Corporations Code as sections 16100 through 16917. The most important main sections for you will be 16601 et seq. dealing with a partner's dissociation; perhaps 16701 et seq.; and 16801 et seq. covering winding-up a partnership's business. You also need to review the partnership agreement for any relevant provisions.

Winding up a partnership can be very simple or extremely complex, depending upon the size and extent of its business affairs. Is it two guys doing a cash business from their computers at home, or does it have a leased factory, dozens of employees, and long-term contracts with multiple suppliers and customers?

In addition, the full answer to your question requires more information, such as whether you want to continue the business yourself, find another partner, or close it down; whether it has employees, contracts with suppliers and customers, significant assets and liabilities, and so on. An eleven-word question isn't much basis for providing advice.

Please feel free to contact me for further discussions (off site) about this partnership. I have a long career as a business entrepreneur before going into law, and you are not so far away that it would be impractical for me to handle any case that may arise here.