Resolving partner disputes

Resolving partner disputes
August 9, 2021
Dispute resolution

The United Kingdom has always been home to some impressive entrepreneurs, with 5.94 million small businesses trading at the start of 2020, accounting for three fifths of the employment and around half of turnover in the UK private sector, according to research by the FSB.

Business partnerships are one of the most popular ways to run a business and can be set up relatively informally but if things go wrong and a partner dispute occurs you might soon be wishing you had put your business relationship on a more formal footing from the beginning. Stephanie Whitchurch from Tallents Solicitors in Newark looks at partner disputes in more detail.

“Sadly,” she says, “disputes amongst partners are more common than people might think and can seriously disrupt the smooth running of the business. Often there will be disagreements regarding strategy and the direction the business is going in, distribution of assets, disputes over running the business or a partner’s conduct, or a desire to remove or appoint a partner.”

In  the absence of an agreement to the contrary, the partners are subject to the default provisions of the Partnership Act 1890 (the Act), which state that:

  • There should be an equal split of profits if partners go their separate ways;
  • The business must be dissolved if one partner dies, retires or leaves the business;
  • No majority of partners can expel any partner;
  • Partners who are liable for the business’s profits are also responsible for any losses, (which will extend to personal assets).

When subjected to default rules of the Act, it can seem even more unfair if a partner is forced to close their business because one partner does not wish to continue, or receive an equal share of the profits even if they haven’t contributed an equal share of capital.

When left to fester, even the most innocuous of partner disputes can grow to be very disruptive to the smooth running of the business and expensive to resolve. Businesses today cannot afford to jeopardise their positions in the wider commercial world or foster poor staff morale while partner disputes occur.

If a partnership dispute does occur then it is essential that legal advice is sought as quickly as possible so that a resolution can be swiftly found. Tallents Solicitors can help with Partnership Disputes regarding:

  • Breaches of statutory and fiduciary duties
  • Disagreements about the sharing or loss of profits
  • Dissolution of partnerships
  • Division of assets and property
  • Governance disagreements
  • Misconduct
  • Suspension or removal of a partner
  • Tax matters
  • Winding up the business

Tallents Solicitors acknowledge that partner disputes of this nature need very careful handling to prevent far-reaching consequences. Therefore our legal experts take a balanced and robust approach when advising clients to guide the parties towards a practical and effective outcome that protects everyone’s interests and has the business’s best interests at heart too.

Please contact us on 01636 671881 to arrange a confidential appointment with one of our experienced Dispute Resolution team.

commercial dispute resolution partner disputes Partnership Act 1890 Partnership Disputes resolving partner disputes
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