  We study the system of coupled atomic and molecular condensates within the
two-mode model and beyond mean-field theory (MFT). Large amplitude
atom-molecule coherent oscillations are shown to be damped by the rapid growth
of fluctuations near the dynamically unstable molecular mode. This result
contradicts earlier predictions about the recovery of atom-molecule
oscillations in the two-mode limit. The frequency of the damped oscillation is
also shown to scale as $\sqrt{N}/\log N$ with the total number of atoms $N$,
rather than the expected pure $\sqrt{N}$ scaling. Using a linearized model, we
obtain analytical expressions for the initial depletion of the molecular
condensate in the vicinity of the instability, and show that the important
effect neglected by mean field theory is an initially non-exponential
`spontaneous' dissociation into the atomic vacuum. Starting with a small
population in the atomic mode, the initial dissociation rate is sensitive to
the exact atomic amplitudes, with the fastest (super-exponential) rate observed
for the entangled state, formed by spontaneous dissociation.
