Section 62(1)(b) of the Partnership Law provides that a partnership formed by an oral agreement may be unilaterally dissolved “if no definite term or a particular undertaking is specified” in the oral agreement.
In Gelman v. Buchler, two recent business school graduates formed a partnership in 2007 with a goal of raising $600,000 from investors “for the purpose of establishing a ‘search fund’ to research and identify a business with growth potential.” The partnership was formed by an oral agreement, and the partners expected that the business plan would reach its objective within four to seven years. Several months later, one of the partners withdrew from the venture after the other partner “refused his demand for majority ownership of the partnership.”
The Court of Appeals held that the non-withdrawing partner’s complaint “lack[ed] a fixed, express period of time during which the enterprises was expected to operate.” The Court also found that “when the entire scheme is considered, the alleged sequence of anticipated partnership events detailed in the complaint are too amorphous to meet the statutory ‘particular undertaking’ standard.” As a result, the Court determined that the partnership agreement, “however well intended,” was indeed dissolvable by either party under Partnership Law 62(1)(b).
Gelman v. Buchler, 2013 NY Slip Op 01991 (March 26, 2013).