SW Legal Educational Publishing

Partners Who Sign Lease Agreement Are Liable for Breach of Lease
Description The members of a general partnership who signed a lease agreement for office space are jointly and severally liable for damages from breach of the lease after the termination of the partnership. Even partners who had quit the partnership before the lease was breached remain potentially liable for damages from the breach.
Topic Business Organization
Key Words Partnership, Liability, Termination
C A S E   S U M M A R Y
Facts A law firm, organized as a general partnership, signed a ten-year lease for office property with Sheehan, who was a partner in the law firm. Sheehan soon withdrew from the law firm and assigned his partnership interest to the remaining partners. Nothing was done at that time to change the lease of the office property then nor when members of the partnership changed over time. After five years, the law firm defaulted on the lease and filed for bankruptcy. Sheehan sued all past and present law firm partners for past due rent and other damages from the default on the lease. The trial court held that the personal assets of the original partners who signed the lease were not at stake, only the assets of the bankrupt partnership, and that none of the later joining partners were liable. Sheehan appealed.
Decision Reversed in part. Sheehan could not hold former partners, who were not partners at the time the lease was signed, liable. However, every general partner who signed the lease became jointly and severally liable for the lease. The liability of any of the partners who signed the lease was not ended when they terminated their participation in the partnership. The partnership itself was dissolved and reformed a number of times as partners left and were added to the law firm, but the lease was not extinguished each time the partnership was reformed over the years. Signing the lease created liability separate from law partnership matters.
Citation 8182 Maryland Associates, Limited Partnership v. Sheehan, 2000 WL 253649 (Sup. Ct., Mo.)

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