Legal Question in Business Law in Illinois

Re: One of Three Partners want out of Partnership

Partnership law can get very complicated but some things about it are pretty basic. Since you are worried about the liabilities, I assume that this is a general partnership, not a limited partnership.

A partnership is governed both by the Illinois Uniform Partnership Act and the partnership agreement, if there is one. A "partnership agreement" means the agreement, whether written, oral, or implied, among the partners concerning the partnership, including amendments to the partnership agreement. You may have a partnership agreement and not even realize it. No one can really advise you without an in depth exploration of the "partnership agreement."

Under the Act, any partner can withdraw ("dissociate") from the partnership, but the partnership agreement may provide that certain dissociations are "wrongful". That is one of the many reasons that you need to consider the partnership agreement.

If a partner withdraws, the statute provides "A partner's dissociation does not of itself discharge the partner's liability for a partnership obligation incurred before dissociation. A dissociated partner is not liable for a partnership obligation incurred after dissociation, except as otherwise provided in subsection (b) of this Section." Subsection (b) makes a partner liable for certain new debts incurred within 2 years under certain circumstances.

Therefore, the general rule is that your husband is stuck with the existing liabilities unless the creditors agree to release him or there is a material modification of a particular liability.

This is a very generalized statement to help point you in the right direction. Before you take any action, you should consult with an attorney who is very familiar with the subtleties of Illinois partnership law.

David Staub

an Illinois business lawyer