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Most people hear “judicial dissolution” and assume you need a blockbuster breach—embezzlement, forged documents, something you can point to and say, that’s the moment the partnership died.

This New Jersey Appellate Division decision is important because it says, pretty clearly: that’s not the test.

In A-2312-22 (decided May 28, 2024), the appellate court focused on the phrase that drives New Jersey’s partnership breakup statute: “not reasonably practicable.” Under N.J.S.A. 42:1A-39(e)(3), a judge can dissolve a partnership if it’s not reasonably practicable to carry on the business in conformity with the partnership agreement. And the court emphasized that this isn’t a technical “gotcha” standard. It’s a reality check standard. Can these partners actually run a business together anymore?

Notice of Breach

Here’s how that played out. One partner receives a formal notice of breach and fails to to respond. No email, no letter, no “we dispute this,” no attempt to work anything out. On its face, that sounds almost too small to end a business. But the court treated it as powerful evidence of something bigger: the partners had reached a point where communication and cooperation—the oxygen of a partnership—were gone.

Not Reasonably Practical Test

The opinion leans on other courts and prior NJ partnership cases to make the same common-sense point: when the relationship has deteriorated to the point of mistrust, refusal to interact, and an impasse on important business decisions, it becomes “not reasonably practicable” to keep operating as partners.

And that’s why this case matters. The Appellate Division essentially says: don’t get lost in the weeds asking, “Did they technically breach paragraph 7.2?” You can win dissolution (and even dissociation) based on proof that the partnership can’t function—because the partners can’t communicate, can’t agree, and can’t manage the enterprise together in any workable way. In this case, the non-response wasn’t treated as a mere etiquette failure. It was treated as a sign that the partnership was already over in practice.

Effective Date of Dissolution

One more practical detail that’s easy to miss: the court also pushed back on backdating the breakup. Dissolution generally becomes effective when the court orders it, and here the Appellate Division directed an effective dissolution date of January 18, 2023, even though the appellate opinion came later in May 2024.

Bottom line: if you’re in a partnership standoff, “going silent” isn’t neutral. In New Jersey, it can become the evidence that gets your partnership dissolved—because “not reasonably practicable” is about whether the business can still run, not whether you can win a technical breach argument.

Citation: AC Ocean Walk v. Blue Ocean Waters, A-2312-22 (N.J. App. Div. May 28, 2024).