Partnership Disputes
Partnership disputes, dissolution, accounting between partners and disputes over partnership property and goodwill.
A Partnership Relationship Has Broken Down
Partnership disputes are governed by the partnership agreement where there is one, and by the Partnership Act 1892 (NSW) where there is not. Many partnerships operate for years on an informal basis and the issues only surface when one partner wants out, dies, becomes bankrupt or starts a competing business.
Is There a Partnership Agreement?
Where a written agreement exists, it usually governs how the dispute should be resolved. Where there is none, the default rules in the Partnership Act 1892 (NSW) apply, including equal sharing of profits regardless of actual contribution.
Rights and Duties Between Partners
Partners owe each other duties of good faith and full disclosure. Understanding these duties is often the starting point for working out whether a partner's conduct has actually crossed a line.
Common Issues in a Partnership Dispute
Contributions and Profit Sharing
Disputes often arise where contributions to the business, in money, time or effort, have been unequal but profit sharing has not reflected that. We advise on how these issues are dealt with under the agreement or the Act.
Misconduct and Exclusion
Allegations of misconduct, being excluded from management, or decisions made without proper consultation are common triggers for a partnership dispute. We assess the strength of these claims and the options available.
Dissolution and Dividing Assets
A partner can generally dissolve a partnership at will by notice, unless the agreement provides otherwise. Goodwill and other partnership property are then usually realised as part of the winding up, often through a sale to a continuing partner.
Resolving the Dispute
Most partnership disputes are resolved through negotiation and a formal accounting between the partners, with litigation reserved for cases where agreement cannot be reached.
How Shah & Co Lawyers can assist
Our focus is on establishing where you stand under the agreement or the Act before any irreversible step is taken.
Partnership Agreement Advice
Advice on rights and obligations under the agreement or the Partnership Act.
Dissolution and Winding Up
Advice and representation on dissolving and winding up a partnership.
Accounting Between Partners
Preparing and disputing accounts on dissolution.
Buy Out Negotiations
Negotiating continuation or exit arrangements between partners.
Restraint of Trade Advice
Advice on restraints applying to a departing partner.
Partnership Litigation
Court proceedings where a negotiated resolution is not possible.
What is usually involved
- Advice on rights and obligations under the Partnership Act 1892 (NSW).
- Disputes over partnership property, goodwill and client lists.
- Dissolution and winding up of partnerships.
- Accounting between partners after dissolution.
- Restraints of trade after a partner leaves.
Frequently asked questions
General information only. Every matter turns on its own facts.
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Learn moreGet clarity on your position in a partnership dispute.
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