A dissolution agreement ends a business partnership, absolving parties of obligations to each other and the company. It includes an introduction, history, conclusion, asset/liability division, responsibilities, and release from future claims. It should be signed in front of a witness or notary public and can be simple or drafted by a professional.
A dissolution agreement is a document that formally ends a business partnership. It not only terminates both parties’ commitments to the other partner, but also to the company as a whole. It also serves as a way for both parties to avoid future misunderstandings and, in many cases, future lawsuits or claims against either party.
Breakup agreements typically follow a change in the business itself or in the partners’ individual goals. It can also occur as a result of achieving the goals of the partnership, in which case the partnership is no longer required. Regardless of the reason for the dissolution, the document itself provides all parties involved with a clean break from each other and legally absolves one or both parties of any remaining obligations to the other person or to the company itself.
A standard dissolution agreement contains several sections of information, although these can be modified to fit your specific business needs. The document typically begins with an introduction by the individuals involved, followed by a brief outline of the history of the partnership, any money involved in the business, and a subsection defining the language used throughout the rest of the document. The next section of the document explains the location of the business, including the state it is in, its address and name.
Next is a section known as the “conclusion.” This provides the specific details of the dissolution, including which partners will acquire certain assets and liabilities. This section is considered one of the most important parts of the long term dissolution agreement. The most important section for the short term is what comes after the “liquidation”.
The next area determines what each partner is responsible for regarding the dissolution. This can be anything from who terminates leases to who issues the public notice of dissolution. It is important that this area is explored and shared by all parties to avoid problems with the official dissolution of the partnership.
The next two sections divide the responsibilities and release both parties from any future claims against them regarding any issues relating to the partnership. In most cases, however, the parties can sue each other if one of the obligations agreed upon in the dissolution is not met. The final area of the agreement may include any amendments, may specify the state laws that will be used to interpret the document, and may include a section known as an “implied non-waiver” statement. This specifies that if one party allows the other to breach an obligation set forth in the agreement, this does not mean that the party is waiving its right to require that obligation to be satisfied in the future.
After the document has been completed and all relevant partners have signed it in front of a witness or notary public, each partner is provided with a copy of the agreement for their own records. A dissolution agreement can be simple and drafted by the people involved. A complicated breakup agreement, however, should be drafted by a professional to avoid loopholes or problems with the document in the future.
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