Opinion ID: 2639199
Heading Depth: 2
Heading Rank: 1

Heading: sale of the business

Text: ¶ 9 Buchi and Parduhn agreed to form their equal partnership under the name University Texaco Company and to conduct a service station business. They operated their business for eighteen years. Early in 1997, they agreed to sell their business and service stations to Blackett Oil Company. They closed their deal on July 14, 1997, transferred the business assets to Blackett, and ceased to do business. ¶ 10 At that point, there was no business, and neither owned a one-half interest in any business. Further, their joint and mutual sale to Blackett invoked the dissolution provisions of the partnership agreement. Accordingly, they began the process of winding up their partnership and liquidating the residual assets. ¶ 11 A contract may be rescinded or discharged by acts or conduct of the parties inconsistent with the continued existence of the contract, and mutual assent to abandon or rescind a contract may be inferred from the attendant circumstances and conduct of the parties. 17A Am.Jur.2d Contracts § 558 (1991) (emphasis added); accord Green v. Garn, 11 Utah 2d 375, 359 P.2d 1050, 1054 (1961) Copper King Mining Co. v. Hanson, 52 Utah 605, 176 P. 623, 625 (1918); see also 17A Am.Jur.2d Contracts § 557 (1991) (If the parties to a contract make a new and independent agreement concerning the same matter and the terms of the latter are so inconsistent with those of the former that they cannot stand together, the latter may be construed to discharge the former.); 17B C.J.S. Contracts §§ 434, 435 (1999). ¶ 12 Buchi and Parduhn's joint and mutual contract with Blackett discharged the partnership agreement because the sale was entirely inconsistent with the partnership's purpose of running a service station business. Both the subject and purpose of their buy-sell agreement, the service station business, could no longer be reached by the buy-sell agreement. That agreement provided that on the death of either partner, the survivor would purchase the decedent's interest in the business and do with the business as he sees fit. In other circumstances, a buy-sell agreement could relate to buying and selling the residual assets after dissolution of the partnership, and thus the buy-sell agreement would not necessarily be inconsistent with the sale of the business and dissolution. This particular buy-sell agreement, however, provided that the surviving partner would purchase the decedent partner's interest in the business for the purpose of continuing the business. Moreover, it contemplated buying and selling no other assets than the business itself. The business could only be sold once, and it was sold to Blackett. Thus, no business was left for a surviving partner to purchase with the proceeds of a buy-sell agreement. It would be highly unlikely that the partners ever intended the residual assets to be the subject of the buy-sell agreement, as the dissent hypothesizes. Further, the residual assets would be liquid, and there is no reason why one partner would wish to exchange liquid assets for the liquid assets of another. ¶ 13 Because the partners no longer owned the business, and the buy-sell agreement could no longer allow the surviving partner to continue the business as he sees fit, the sale of the business to Blackett was completely inconsistent with their buy-sell agreement. Thus, Buchi and Parduhn mutually assented by their acts and conduct in selling the business to terminate not only the partnership agreement generally, but also the buy-sell agreement specifically.