In partnerships, what happens to the decision-making authority when a partner withdraws or dies?

When a partner withdraws or passes away, the partnership is generally dissolved, leading to what is known as the "dissolution of partnership." This is due to the legal nature of partnerships, where each partner is integral to the entity's operation. The withdrawal or death of a partner is considered a significant change in the partnership dynamic.

Upon dissolution, the partnership can no longer operate as it did, requiring the partners to settle accounts and potentially form a new partnership if they choose to continue the business together. While there may be provisions in the partnership agreement that allow for continuity, in the absence of such provisions, the legal presumption is that a partnership ceases to exist with such drastic changes in its composition.

In essence, dissolution means a fresh start is necessary, either by entering a new agreement, deciding whether to retain certain assets, or how to handle ongoing liabilities. Thus, selecting to dissolve the partnership accurately reflects the legal expectations surrounding the impact of a partner's withdrawal or death.