A Business Partnership can be a good way for parties to work together to achieve common goals. Like any relationship, Partnerships can also experience conflicts and disputes.
If a disagreement arises, it is important that any resolution protects your interests.
Our commercial litigation and partnership dispute lawyers offer expertise in resolving Partnership disputes. We can safeguard your rights and help you understand your options. Contact us for practical and effective solutions.
There are various ways to structure a business and each can come with unique benefits. One of these is as a Partnership.
Business Partnerships are a popular way for individuals (or companies) to work together. A Partnership allows one or more parties to join forces for a commercial venture. They can combine their resources, capital, skills, and expertise.
Partners in a Business Partnership form a legal relationship through a written agreement. The partners invest their money in the business and share profits and losses.
Throughout this article we will explore:
In Queensland, the Partnership Act 1891 (Qld) is the legislation that governs Partnerships. This Act sets out the rights and obligations of business partners. It also details the procedures for dissolving a Partnership.
If you are looking to structure your business as a Partnership, it can be prudent to get legal advice first. Our lawyers can ensure you understand the legal requirements of a Partnership structure. We can also draft your Partnership Agreement in compliance with the relevant legislation.
Contact us to speak to a lawyer if you would like advice on starting a Business Partnership.
One of the key responsibilities of partners is to act in the best interests of the Partnership.
Each partner must act honestly and fairly in all their dealings.
Partners also have a duty to:
There are several legal benefits to structuring a business as a Partnership. These include:
There are also general benefits when it comes to the running of the business. These include:
There are some disadvantages to structuring a business as a Partnership to consider. These disadvantages include that:
Joint and several liability means that each partner is liable for the same debt and each other’s debt. This means a partner is liable for debt they incur as well as all debt incurred by the Partnership.
Partnership disputes can arise for a variety of reasons. Some of the most common causes of disputes include:
Disputes often arise around the management of the Partnership’s finances. For example, how they should distribute profits and losses. They may also fail to agree on how to handle liabilities.
Conflicts can also arise over who should be doing what within the Partnership. Uneven workloads between partners can be a cause of disputes. If one partner feels they are doing more work than the other, this can lead to resentment and conflict.
Different philosophies, goals, and objectives can also lead to difficulties in a Partnership. Partners may have different ideas about how to effectively run the business. These differing views can lead to costly disputes if not addressed.
There are steps that can help prevent these types of disputes from arising.
A well-drafted Partnership Agreement should:
Partners can mitigate the risk of conflict:
As the actions of a single partner can be binding on all partners, there is a significant degree of trust needed. Therefore, each partner in a Partnership holds a fiduciary duty to the others. This essentially means they have a duty to put the interests of the Partnership above their own.
If a breach of this duty has occurred, especially if it’s resulted in loss, legal action may be necessary.
If you believe that your business partner has breached their duty, contact us to speak to a lawyer. We can help you understand your options and take action to protect your rights and interests.
Speaking to an experienced partnership dispute lawyer can set you up for success.
If you are facing a dispute with a business partner, there are several options for resolving it. Our lawyers have the experience and knowledge to help you navigate the process. We understand the importance of finding a resolution that achieves your desired result. The primary two avenues for resolving Partnership Disputes are by:
Alternative dispute resolution methods can result in a binding agreement between the parties. Resolving disputes in this manner can:
Mediation is a form of alternative dispute resolution.
In a mediation, a neutral third party, known as the mediator, will sit down with the disputing parties. The mediator will assist the parties to work through the issues in dispute.
The purpose of mediation is to reach a mutually acceptable resolution. The mediator will help the parties to communicate effectively and find common ground.
The parties maintain control over the outcome of the dispute. The mediator does not make decisions for them but rather facilitates their negotiations.
Mediation can be particularly beneficial for preserving the business relationship.
You may have a lawyer attend the mediation with you and consult them during negotiations. This can help ensure any agreement reached protects your interests.
Arbitration is similar in ways to mediation. It is, however, a more formal process and will result in a legally binding decision. The parties present their arguments and evidence to a dispute resolution practitioner (arbitrator). The arbitrator will make a final determination to resolve the dispute.
The process is voluntary and the parties must agree to take part. The arbitrator will be an independent party and their decision is legally binding.
Arbitration is often a suitable method for resolving Partnership disputes. So much so that Partnership Agreements will sometimes contain an arbitration clause. It offers simplicity, confidentiality, and finality. It can be an efficient means to bring the dispute to an end.
You can, and most often should, be legally represented in arbitration. It is also a good idea to seek legal advice before entering into arbitration. Our lawyers can help you to understand your prospects and represent your interests.
You may also wish to first attempt to negotiate a settlement with the other party. Initial negotiations:
This can help you to determine what step to take next. Clarifying the party’s positions can:
It may be necessary to commence Court proceedings if:
In the second event, you may be able to seek injunctive relief. This can stop the partner from continuing to damage the business.
If a partner’s breach of duty has resulted in financial loss, you may be able to sue them for damages.
Our litigation lawyers can review your situation and advise you on the best way forward. We work closely with commercial barristers so are well-placed to fight for you in Court.
Aitken Whyte Lawyers can achieve your desired result by:
If you need to stop or recoup your loss from a business partner, we can act quickly to preserve your rights.
In some cases, partners can leave a Partnership by providing notice to the other partner(s). This change in partners will result in the dissolution of the Partnership.
The partners may then wind up the business by:
The rules for settling the Partnership’s accounts are set out in the Partnership Act. Partners must generally distribute any remaining surplus proportionally, with regard to:
The partners may instead agree to a sale of the exiting partner’s shares to the remaining partner(s). In this case, the previous Partnership is still dissolved but the business is not wound up. Instead, the remaining partner(s) takes over the Partnership’s responsibilities, liabilities, and assets. It may be that a new Partnership is formed.
A partner may also apply to the Court for a dissolution of the Partnership. The Courts have the power to dissolve a Partnership and may do so for a number of reasons. These include if:
We can assist in the process of:
Partnership disputes can be complex and challenging to navigate. As partners are personally tied to the business, the outcome can greatly impact them.
It is important to seek the advice of experienced commercial lawyers if facing a dispute. We can help you understand your rights and obligations, and work towards a resolution.
Our team of skilled litigation lawyers are well-versed in handling Partnership disputes. We can provide you with the guidance and support you need to achieve a successful outcome.
Aitken Whyte Lawyers Brisbane
2/414 Upper Roma Street
Brisbane QLD 4000