ACCA Applied Skills · Corporate and Business Law (Global) · Partnerships
Lena and Marco are partners. Lena discovers that Marco has seriously breached the partnership agreement by repeatedly diverting firm funds to his own account. The agreement contains no expulsion clause. Which is the most appropriate step for Lena to end the partnership?
Lena should apply to the court for dissolution on just and equitable grounds. Marco's repeated diversion of funds is serious misconduct, and with no expulsion clause she cannot remove him herself or unilaterally sell firm assets.
- AApply to the court for dissolution on just and equitable groundsCorrect
- BExpel Marco by informal majority vote
- CWait until the firm's next financial year ends
- DSell the firm's assets without notice to Marco
Explanation
A court can order dissolution where a partner's conduct makes it just and equitable, such as serious breach or misappropriation. Without an express power, a partner cannot expel another, and selling assets unilaterally would itself be a breach.
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