Nath Solicitors discusses partnerships, common causes of partnership disputes, the need for partnership agreements, and remedies for resolving partnership disputes.
A partnership is a form of business structure defined under s.1 of The Partnership Act 1890, as “the relation which subsists between persons carrying on a business in common with a view of profit.”
Unlike limited companies, partnerships do not have separate legal personality. This means that each partner is jointly and severally liable for the debts and obligations of the partnership.
Common Reasons for Partnership Disputes
Disputes in partnerships can arise for a variety of reasons. Common causes include, but are not limited to:
- Financial disagreements
- Breach of the partnership agreement
- Breach of fiduciary duty
- Lack of contribution
- Disagreements over strategic direction
- Exit, retirement, or dissolution disputes
The Importance of a Partnership Agreement
Having a written partnership agreement is essential because it sets out how the business will be managed, how decisions are made, how disputes are handled, and what happens if a partner leaves or the partnership dissolves.
Without a written agreement, the partnership will be governed by the default provisions of The Partnership Act 1890 (the Act), which may not suit the specific needs of your business. For example, the Act assumes equal profit sharing, regardless of the amount of capital or effort contributed by each partner and gives all partners an equal say in decision-making.
What Happens if a Dispute Arises?
If a dispute occurs, the first step should always be to consult the partnership agreement, which may include a dispute resolution clause.
It is generally advisable to resolve disputes without litigation. Forms of alternative dispute resolution (ADR) such as negotiation or mediation can be highly effective and are often faster and more cost-efficient than going to court. However, if a resolution cannot be reached, court proceedings may become necessary.
Available Remedies in a Partnership Dispute
If litigation becomes unavoidable, the courts may offer a range of remedies, including:
- Injunctions
- An account of profits
- Dissolution of the partnership
- Expulsion of a partner
- Damages
How Nath Solicitors Can Help
Nath Solicitors has expertise in partnership dispute resolution and advice. We aim to resolve disputes efficiently and with minimal disruption to your business, whether through alternative dispute resolution, or court proceedings where necessary. If you need advice or assistance, please contact us on 0203 983 8278 or get in touch with the firm online.