Business Partnership Disputes
Disputes among business partners are almost inevitable, and can significantly impact the well-being, growth, and success of the business. If a company is not incorporated and there is a relationship between persons carrying on a business with a common view to profit, a partnership likely exists. If so, the Partnerships Act will govern that relationship.
Disputes within a partnership must be dealt with quickly and quietly to preserve the business reputation and relationship among partners. These disputes can arise for many reasons, such as:
- Breach of fiduciary duties by a partner;
- Breach of Partnership Agreement;
- Partnership mismanagement;
- Dissolution of Partnership;
- Expulsion of a partner; or
- Termination of Partnership Agreement.
In some circumstances, the best approach to managing a partnership dispute is to seek a negotiated resolution. Alternatively, other situations, such as a serious breach of fiduciary duty by a partner, may require litigation. Depending on the seriousness of the dispute, it may be appropriate to take measures such as buying out the other party or dissolving the partnership.
Dissolving the partnership is, of course, an important decision that should be thought through. In the event dissolving the partnership is necessary, partners must remember:
- It must be done in a fair and responsible manner;
- Rights and obligations of partners may continue following the dissolution of the partnership, for example, confidentiality and fiduciary obligations;
- Generally, unless agreed otherwise, assets of the partnership such as equipment, client lists, and other partnership property should be divided fairly among the partners.
Business partnership disputes are difficult to manage and require experienced guidance. We are here to assist you to protect your business.