Legal Updates

A notice regarding the dissolution of a partnership grants each partner the mandate to demand the settlement of partnership accounts

January 21, 2021

A partner sent a letter in which he requested the dissolution of the partnership due to disagreements that arose between the partners regarding the joint company’s management.
The Court held that the letter in which the partner announced the partnership’s dissolution, led to a de facto dissolution of the partnership in a manner that requires settlement of the partnership accounts. Israeli Law stipulates that one of the ways to dissolve a partnership founded for an indefinite period is by notice of one of the partners, subject to the partnership agreement, with the date of dissolution being the date specified in such notice. Once such notice is given, each of the partners may demand the settlement of the partnership accounts as well as the termination of its affairs. If there are difficulties in settling the accounts, each partner may move the Court for disclosure of the accounts. Here, the partnership is in the status of a "liquidated partnership" from the date stated in the partner’s letter. Thus, the partners must act to dissolve the partnership and settle its accounts.