In this, the last lesson on the topic of partners we shall discuss the termination of the partnership according to halachik principles.

If there is an agreement, not in violation of relevant laws of the community, the agreement will govern the relationship among the partners as to termination. Absent such agreements or stipulations, and absent local laws, the partnership will terminate by mutual consent or as hereinafter stated. In all cases, Beth Din must examine all of the circumstances to determine if there are grounds for terminating the partnership. unless by agreement or by statute it may be terminated by any partner at will.

If the partnership is organized to last for a certain term. neither partner may by himself terminate the partnership prior to that date.

If the partnership is organized without an agreed termination date at the outset, any partner may demand termination of the partnership at any time.
If the partnership is formed for a specific purpose, then no partner may terminate the partnership before the purpose is achieved. Lets assume that Reuven and Shimon formed a partnership to build a new stadium for a city.

Each may have outside businesses, but they must continue to complete the stadium, although no time was stipulated in their agreement. Or they may have agreed to open a joint booth at a trade fair. They may not withdraw from this agreement until the fair, closes. They may stipulate that if there are certain profits or losses the partnership will terminate, or that if one is caught cheating or if one is negligent in his performance of his duties, the other partner may terminate the partnership.

If the partnership has no funds to operate, any of the partners may terminate the partnership.

Although Reuven acted beyond the scope of his authority or contrary to the custom of the community and has to make good the losses suffered as a result of his conduct, this in and of itself is not a reason for Shimon to terminate the partnership. However, if Reuven does not make compensation in such cases, Shimon may terminate the partnership. If Reuven intentionally causes losses to the partnership, Shimon may immediately terminate the partnership.

Shimon may terminate the partnership if it is shown that Reuven is cheating him and taking moneys or merchandise stealthfully. As stated above, if Reuven refuses to perform his duties in the partnership, Shimon may terminate the partnership.

If the partnership agreement provides that each partner will contribute moneys as needed by the partnership, and Reuven fails to provide such sums as needed, Shimon can terminate the partnership. Even absent a provision in the partnership agreement, Shimon may apply to Beth Din under the facts of the situation to compel Reuven to contribute more money to the partnership to match the money Shimon is about to contribute to continue the business of the partnership. If Beth Din decides that Reuven must contribute more funds and he refuses to do so, Shimon may terminate the partnership.

In the event that Shimon becomes ill or disabled and is not able to perform his task for the partnership, Reuven may carry on the business of the partnership and Shimon is entitled to his share of the profits. Reuven will be acting beyond the requirements of the law in this instance. He would be acting lifnim mishurath hadin. (See lessons 137 to 141, TT 520-524.) Beth Din may not compel Reuven to so volunteer his services on behalf of the partnership and to do the work of both partners. If there are any losses to the partnership, Shimon must bear his share of the losses. If Reuven works overtime during Shimon's illness, he can apply to Beth Din to receive extra compensation for such work. If Reuven cannot carry on the business of the partnership by himself, he may hire another person at the expense of Shimon. If Shimon becomes ill or injured by reason of the partnership business, (for example, they are in the butcher business and Shimon cut his hand while slicing meat for a customer, or Shimon is on a sales trip and his automobile is involved in an accident) in many communities there are specific laws covering illness or injuries to workers and partners and these would ordinarily be controlling. There may also be insurance available to a business to cover the situation when a key man is disabled from performing his duties in the business.

The death of Reuven terminates the partnership even if the term provided in the partnership agreement has not yet expired. Reuven's heirs cannot compel Shimon to continue the partnership with them, and he cannot compel them to continue the partnership with him. Shimon can assert his privilege of being in partnership with those whom he chooses. Similarly Reuven's heirs can assert the same privilege. Shimon will be compensated for his work done while winding down the partnership business. Similarly, if Yehudah invests in the partnership of Reuven and Shimon and Reuven dies, Shimon can terminate the partnership and return Yehudah's investment to him. If Yehudah invests in a partnership consisting of Reuven and Shimon and Reuven wants to return Yehudah's investment and Shimon does not, the agreement between Reuven and Shimon regarding this eventuality will be controlling and absent such a provision in the agreement, Beth Din will decide the issue. If Yehudah is an investor in the partnership and is not a partner, the partners can terminate the partnership without Yehudah's consent. Or if Reuven is doing business as a sole proprietor and Yehudah invests money with him, Reuven may at his own discretion return to Yehudah his investment if the type of business conducted by Reuven was for personal services. For example, Reuven is a painter and Yehudah invested by supplying the money for Reuven to purchase paints and brushes. This may be done even if the investment is for a specific period and the period has not yet terminated. On the other hand, Yehudah may not request a return of his investment prior to the date specified in their agreement. Reuven has the right to terminate as does any employee even before the termination of the term of employment. However, if the business of Reuven is not for personal services, such as Reuven maintaining a store in which he sells merchandise, Reuven may not return to Yehudah his investment before the term has terminated.

In all of these instances, Yehudah can apply to Beth Din to see that his rights as an investor are protected and that the partners do not take his money without giving him a fair share consistent with what was contemplated when he invested with them.

In all of these situations, it is suggested that Shimon apply to Beth Din for an order permitting him to terminate the partnership for the reasons stated. Such order should be issued by the Beth Din only after Reuven has been afforded an opportunity to be heard, unless Reuven cannot be contacted within the jurisdiction of the Beth Din.

If there are many partners, no partner may withdraw from the partnership and assign his interest in the partnership to an outside party, not even to one of the partners, without the consent of all of the partners, unless the partnership agreement gives him the right.

Of necessity these lessons cannot delve into the many profound halachik aspects of partnerships. The same of necessity hold true of all subjects discussed in these lessons. I know that Phil and I are vindicated in publishing these lessons if the reader will get to learn that halacha deals with all aspects of our lives, including the topics of these lessons. The amount of inquiries that I receive shows that many readers take to heart the halachoth discussed in these lessons.

The subject matter of this lesson is more fully presented in Volume VI Chapter 176 of"A Restatement of Rabbinic Civil Law" by E. Quint, published by Jason Aronson, Inc. and on sale at local Judaica bookstores.
Questions to quint@inter.net.il

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