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Partnership Disputes

Commercial partnership disputes often arise due to various reasons. Knowing your rights and responsibilities is important when resolving a dispute and can help to keep the business asset in tact.

Whether you have a partnership agreement in place or not the law defines a business partnership.

In Victoria a partnership is the relationship which subsists between persons carrying on a business in common with a view of profit.

If you are in a business together to make a profit you could be considered to be in a partnership and in resolving disputes you will need a lawyer to assist with helping ensure that you are covered and aware of your rights and obligations under the law.

As the partners are all jointly and severally liable for partnership it is important that disputes and issues are sorted out quickly.

Some disputes that our partnership lawyers regularly advise on are:

  • Conflicting interests – Partners may have different visions for the business or conflicting ideas on how the business should operate.
  • Departure of a partner– Expulsion or by Retirement, when there is no partnership agreement or a poorly drafted agreement, disputes may arise when a partner retires or is expelled. For example, the payment to be received for their equity may be in dispute.
  • Breach of Fiduciary duties– A partnership relationship imposes fiduciary obligations on partners. Each partner has a duty to act in the best interest of the business.
  • Examples of breaches:
    • A partner making secret profits
    • A partner engaging in an undisclosed activity which is for their own benefit or the benefit of a third party
  • Misappropriation of business assets– A partner may be using the business assets and business funds for personal benefit which can be costly to the business
  • Non-performance or underperformance of a partner
  • Management or personality conflicts – Partners may not see eye to eye
  • Distribution of profits and capital contributions – There can be disagreements or wrongful distributions that can be clawed back
  • Regulatory Issues – Such as legal, taxation or accounting
  • Death of a partner – Which usually means the Estate of the deceased needs to deal with the situation and/or that the deceased partner’s share needs to be bought out by the others partner/s

No matter the reason, partnership disputes can become messy and stressful. Left unresolved, they can be disruptive to your personal life and have a significant impact on the business. To mitigate any damage, seek legal advice sooner rather than later.

At PCL Lawyers, we aim for a rapid resolution that is aligned to your desired goals. We consider what the best outcome for you would be and what outcome you would like.

Our partnership lawyers are skilled in the litigation processes and we ensure that we get the best outcome by careful planning and consideration of your case and the facts surrounding it.

We can help resolve your partnership dispute by:

  • Advising you of your rights and obligations in the partnership/under a partnership agreement
  • Drafting documentation and settlement deeds
  • Representing you in negotiations and Mediations or Arbitration
  • Appearing for you in court proceedings
  • Effecting and managing the exit of a partner from the partnership or the dissolution of the partnership
  • Identifying potential problem areas in your business with our business check up  to avoid future issues and disputes
  • Carefully draft a partnership agreement to avoid future partnership disputes

In some cases it may be a simple letter to help resolve the issue. In other cases, firm negotiation could resolve an issue. In other instances where a more significant breach has occurred, serious action can be taken against the defaulting partner.

Whether you are starting a business Partnership or looking at dissolving a business Partnership, legal advice should be sought. Often times people will look at the short-term rather than considering the long-term consequences and without proper legal advice you can make decisions that can cost you revenue and missed opportunities.

How are Disputes Sorted out?

If there is a partnership agreement in place we can assist by advising on the agreement and usually there is a dispute resolution clause in place.

Normally a dispute resolution clause would outline the various methods such as arbitration or mediation. In other cases court action is possible and more effective.

If no partnership agreement is in place the relevant legislation applies in each State, for example in Victoria it is the Partnership Act 1958. We can also provide advice on jurisdictions outside Victoria.

Our dispute lawyers will work with you to go through the facts and events that lead to the dispute and work out a plan and advise you of what options you have.

Before a matter progresses too far, we would correspond with the other party or parties and try and reach an early agreement and resolution. Sometimes quick action will need to be taken to protect the business or prevent loss.

What happens if there is no Agreement in place?

If no Agreement is in place then the law governing where the partnership trades will dictate how the partnership dispute is resolved. It is quite a common issue. A litigation lawyer who is skilled in handling and resolving disputes will be able to advise you of the most practical path to take to have your issue sorted out quickly and correctly.

Finalising a Partnership

If you are intending to dissolve a partnership make the sure the agreement is carefully considered particularly if you intend to continue to work in the same or similar industry. How the assets are divided is important.

Such items need to be carefully considered when finalising a Business Partnership:

  • Contractual Arrangements
  • Distribution Agreements
  • Clients
  • Licences
  • Debts
  • Assets
  • Profits
  • Tax Liability

By taking the time to understand your personal and commercial needs and the requirements of the partnership business, our experienced team can assist in mending the partnership or if required, sever the partnership in the most cordial way possible.

We Can Assist

Obtaining the right advice can be the difference between a broken relationship and an amicable solution.

Call Today on 1300 907 335 or contact us by completing the enquiry form and we will get back to you promptly.

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