Partnership Dispute and Partnership Dissolution

Partnership Disputes

When a partnership deteriorates or completely breaks down it can cause distress and difficulties in relation to decision-making and the general day to day operation of the business.

We understand that partnership disputes need to be resolved quickly in order to minimise their impact on the running and success of the business.

We will aim to resolve the dispute or to reach a compromise using initial communication and negotiation which may lead to Alternative Dispute Resolution if necessary. If the dispute cannot be resolved and court intervention is required we will always put your best case forward.

Partnership Dissolution

Dissolution of a partnership occurs when the partnership relationship terminates. Dissolution does not inevitably lead to a winding up of the partnership.

Technical Dissolution

A “technical” dissolution arises when one partner leaves and/or another partner joins, but the business carries on under a new partnership arrangement. In effect, the old firm has dissolved and been replaced by a new firm of partners which will take on the assets and liabilities of the old firm and the business continues without a break. As far as an outsider is concerned, the partnership

General Dissolution

In contrast a “general” dissolution usually refers to a dissolution leading up to a winding up of the business and assets. Once the winding up is complete, the creditors and other liabilities satisfied and the remaining assets distributed among those partners so entitled, the partnership is at an end.

A general dissolution can be brought about by any of the following:

  • Unanimous agreement (section 19, PA 1890)
  • The exercise of an express power to dissolve in the partnership agreement (which could be by way of a majority agreement).
  • Rescission of the partnership agreement for fraud or misrepresentation of one of the partners (section 41, PA 1890)
  • The occurrence of an event specified in the PA 1890, for example:
    expiration of a fixed term or the end of the venture for which the partnership was establishedor, if the partnership was entered into for an undefined time, by any partner giving notice (sections 26(1) and 32, PA 1890) (see Expiration of fixed term);
  • by the bankruptcy or the death of a partner or a charge being created on a partner’s share in the partnership property for payment of his separate debts (section 33, PA 1890) (see Dissolution by death or bankruptcy and Dissolution by charging order); or
  • by an event making it unlawful for the business of the firm to be carried on or for the members of the firm to carry it on in partnership (section 34, PA 1890) (see Dissolution by illegality).
  • By the court on the application of a partner on one of the following five grounds:
    • permanent incapacity of a partner;
    • conduct by a partner calculated to prejudice the carrying on of the business;
    • deliberate or persistent breach of the partnership agreement by a partner;
    • the partnership business only being carried on at a loss; or that dissolution is “just and equitable”. (Section 35, PA 1890).

If you and your partner are in dispute or for whatever reason you are seeking a partnership dissolution we will be happy to help.

Call us on 01604 321 655 for your initial consultation.

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