Lawyers who specialise in disputes between Business Partners
What is a partnership?
A Business Partnership is created whenever two or more people go into business together and share any profits and losses – even if there is no written partners agreement, and even if they were unaware they were creating a partnership. Without a written partners’ agreement, the business is governed by the 1890 Partnership Act. But business partnership disputes are usually much simpler to settle if there a properly drafted written agreement in place.
Quite apart from the thousands of professional service businesses using partnerships as their business vehicle of choice, many new businesses use the partner route which is quicker and easier to setup than a company. In fact some people probably don’t even realize that their business is a partnership automatically created under the 1890 Act.
For FREE initial legal advice about any commercial dispute, just call our Lawyers on FREEPHONE 0800 1404544 or Salisbury 01722 422300.
Why Choose Our Business Partnership Disputes Lawyers
Our solicitors represent partners in commercial disputes both locally in Wiltshire, Hampshire, Dorset and Somerset – and throughout England and Wales
• Specialist experience: Our commercial dispute team regularly advises on complex partnership and LLP disputes nationwide.
• Practical advice: We focus on achieving sensible, cost-effective outcomes — not long, drawn-out litigation.
• Transparent costs: Wherever possible, we offer fixed fees or clear cost estimates from the outset.
• Accessible service: We’re available by phone, video call or in person at our offices in Salisbury, Andover, Amesbury and Fordingbridge.
Whether your business operates locally or across the UK, we’ll help you protect your investment, reputation, and professional relationships.
Common Types of Partnership Disputes We Handle
Our solicitors regularly act for partners across a wide range of industries — from professional firms like accountants, solicitors, GPs, architects and surveyors, to local retail businesses, trades, and service partnerships. Some of the most common disputes we encounter include:
• Disagreements over profit-sharing – where one partner feels they’re doing most of the work but not receiving a fair return.
• Allegations of breach of duty – such as a partner acting against the interests of the business or competing with it behind the scenes.
• Disputes about capital contributions – where one partner has invested significantly more than another and seeks repayment or recognition.
• Claims of misappropriation or “secret profits” – where one partner is accused of diverting funds or opportunities.
• Disputes over business direction or strategy – often arising when partners have very different growth plans or risk appetites.
• Alleged misconduct or negligence – where one partner’s actions damage the partnership’s reputation or finances.
Whether or not you have a written agreement, if you’re involved in a tricky dispute with your partners, it’s sensible to get expert advice. Each situation is unique, but early legal advice is almost always the key to keeping costs and damage under control.
Rest assured that our Business Partnership Disputes Lawyers have that specialist experience and will take a practical and commercial view of your dispute. And the team offer a wide variety of solutions to your legal dispute – from negotiation and mediation to commercial injunctions.
Understanding the Legal Framework for Business Partnerships
The law governing business partnerships can be surprisingly complex. Many people assume that because they didn’t sign a formal agreement, they aren’t in a partnership. However, the Partnership Act 1890 still applies in those situations and will dictate how disputes are resolved.
That Act, now well over a century old, sets out default rules about how profits, losses, and responsibilities are shared – but those default rules rarely reflect what modern business partners actually intended. For example:
• All partners are assumed to share profits and losses equally, regardless of how much money or time each person invested.
• Every partner has an equal say in management decisions.
• No partner can be expelled by the others unless there is a written agreement allowing it.
Because of these default rules, partnerships formed without clear terms can quickly become unmanageable when disagreements arise. This is why our lawyers strongly recommend that every business partnership has a properly drafted written agreement in place — ideally before any major money or assets change hands.
Limited Liability Partnerships (LLPs) and Disputes Between Members
Many modern professional firms now operate as Limited Liability Partnerships (LLPs). While LLPs share some similarities with traditional partnerships, they have distinct legal differences that affect how disputes are handled.
In an LLP:
• Members (partners) have limited personal liability for business debts.
• The LLP is a separate legal entity from the individuals who run it.
• Disputes are usually governed by an LLP Agreement rather than the Partnership Act 1890.
If no LLP Agreement exists, the Limited Liability Partnerships Regulations 2001 apply by default — which again may not reflect what the partners actually intended.
Typical LLP disputes include disagreements over profit allocation, management responsibilities, or the removal of members. As with traditional partnerships, the best protection is a carefully drafted written agreement — ideally prepared when relationships are still good.
Steps to Take When a Partnership Dispute Arises
If tensions are building or communication has broken down between partners, it’s vital not to delay. In our experience, early intervention and open communication can prevent business partnership disputes from escalating into full litigation.
We usually recommend the following practical steps:
1. Review any existing partnership agreement or LLP agreement – to identify rights, responsibilities, and exit provisions.
2. Clarify financial records – including accounts, drawings, and contributions. A dispute can often be resolved by agreeing on the underlying figures.
3. Seek early legal advice – to understand your position before making any threats or taking irreversible action.
4. Consider mediation or negotiation – an independent mediator can help partners reach a compromise while maintaining working relationships.
5. If necessary, consider dissolution or court action – but only after all other avenues have been explored.
Our lawyers can guide you through each of these steps, ensuring that your rights are protected and that any agreement or settlement is properly documented.
How to leave a partnership
While starting a business partnership off can be incredibly simple, getting out of the business may prove to be much more complicated – especially if you were not prudent enough to have a written partnership agreement properly drafted by specialist lawyer.
Put very simply, there are two main ways in which a partner can leave a business partnership: resignation or expulsion.
The route you choose depends largely on whether the person wishes to leave the business voluntarily or whether the other business partners wish to have the person removed for the good of the business.
If a person wishes to resign from the business, there’s no statutory notice period and they can resign effectively immediately.
However, if the business’s Articles of Association or any specific agreement with the person states a notice period, this must be honoured.
Most partnership agreements will contain a minimum notice period and it’s important that this is regarded as otherwise you could find yourself in breach of contract and liable to an expensive court case.
In the case of Limited Liability Partnerships, a person can leave the partnership by dissolution, agreeing with the other members of the partnership to leave and by giving reasonable notice to the other partners of their intention to leave. The process is much simpler because, as with a limited company, the business exists as a separate legal entity to the people who run it and as such does not require the partnership to remain for it to exist as a company. An LLP agreement is vital, though, as otherwise a partner cannot be expelled by a majority vote should that be necessary.
Can a majority of the partners simply remove someone from the partnership?
That really depends on whether or not you have a well drafted partnership agreement or not.
If other partners which to expel a person, this is difficult unless there is a written agreement ( in the case of a LLP, a clause in the company’s Articles of Association) which states the circumstances under which a partner can be expelled. Again, there may be a set procedure which will need to be followed but this will be specific to each individual business.
If nothing is set out, the only answer may be to dissolve the partnership.
If the business is not structured as a Limited Liability Partnership, the partnership will be automatically wound up, its assets sold and creditors paid off with the proceeds. This can, however, be avoided by having a written agreement in place.
Partnership Dissolution and Winding Up
Sometimes a business partnership dispute reaches a point where the only practical solution is to dissolve the partnership. Dissolution can happen:
• By agreement between the partners.
• Automatically on the death or bankruptcy of a partner.
• By court order.
• When the partnership’s fixed term (if any) expires.
When a partnership is dissolved, its assets must be valued, debts paid, and the remaining balance divided between the partners. This process can be straightforward if accounts are up to date and all parties cooperate — but it can also become highly contentious.
Our lawyers can help:
• Help in arranging to value partnership assets and goodwill.
• Negotiate terms for one partner to buy out another.
• Ensure that creditors are properly paid and liabilities settled.
• Draft settlement deeds to avoid future claims.
How our Lawyers help to resolve Business Partnership Disputes
Wherever your business is based in the UK, our lawyers can help by taking your instructions and providing advice by phone, video call or email. Or, if you are local to our Wiltshire, Dorset or Hampshire offices, you may prefer to meet us there.
•In the absence of a written agreement, we strongly support the use of alternative dispute resolution. In particular we recommend mediation wherever possible, and can also assist you in selecting the right mediator and by preparing for and supporting you throughout the mediation process. We really understand how mediation works – and how to get the most out of it for our clients
•However if both mediation and negotiation fail, you may be left with little choice but to refer the partner dispute to court – in which case we will support you throughout in any litigation.
•Our team can assist you in a partnership dissolution, if required.
•We can draft or update any existing written agreement – to reduce the risk of future partner disputes.
Click here for more information about why you need a written partnership agreement and what that agreement should contain
Is your Business Partnership Dispute worrying you?
We strongly recommend early legal advice in the event of any existing or likely partner dispute. What’s more our lawyers offer no strings attached FREE initial phone advice.
So if you already involved in a business partnership dispute, or fear that you could be, and want to know more about your options – so there’s no reason for you to continue to suffer in silence. Call our specialists for a free initial chat today.
Business partnership disputes – how big is the problem?
A few years back the Lawyer Magazine revealed government statistics which show that the number of partnership disputes which have reached the High Court almost doubled in 2009 – increasing to 106. These are, of course, only those that make it all the way to the High Court – and industry experts suggest that this could be just the tip of the iceberg. So what is the answer?
What Can Cause Business Partnership Disputes?
It has to be said, there can be many advantages to a business partnership – when it works. For example, costs, responsibilities, and risks can all be shared. The partners can work with each other’s strengths and weaknesses and motivate each other.
However, there are many reasons why partnerships don’t work out, and business partnership disputes can arise. Here are the most frequent ones.
• Shared profits but unshared workloads – There are numerous examples of businesses where one partner has put in the vast majority of the money, and the other partner does the vast majority of the work – not 50:50 partnerships by any definition. As the business takes off, the partner who is doing all of the work continues to work harder, but their percentage stays the same. They can eventually become very disgruntled with their (usually) low percentage share in the company, and a business partnership dispute can arise as a result.
• Shared decisions – An effective partnership is one where the two partners are interdependent. Most businesses have several important decisions that need to be made on a frequent basis. If one partner does not agree with the other’s decision, especially if the decision will change the course of the business, this may be another cause of a partnership dispute.
• Personality Clashes – The partners may realise that they don’t get on both in and out of business. This can affect their relationships and the outcomes of meetings and decisions. They may go out of their way not to work together. This may make the partners and hence the business less productive.
• Different Visions for the business – One partner may want to build the business up slowly, whereas the other has a very aggressive strategy for growth. It is important that both partners share the same vision for the business, as that makes them more likely to co-operate on the day-to-day decisions that need to be made. Having different visions for the business can negatively affect how it is run, and decrease productivity as it will take much longer to reach a decision that both partners are happy with.
• Breaking trust – If one partner does something that is considered “shady” or illegal, particularly behind the other partner’s back, this is a very quick route to a business partnership dispute. For example, one partner may not disclose some of the profits they have made to the other partner, this is known as “secret profits”.
• One director or partner losing interest in the business or focusing his or her time elsewhere
• A failing business – Another very common reason for a partnership dispute to arise. If a business is failing, one of the partners may try to shun their responsibility or run away from debts that are payable by the company.
Outlined above are some of the more commonplace reasons for business partnership disputes, although they can happen for several other reasons, depending on the individual circumstances. If you and your partner are in the midst of a partnership dispute, seek legal advice from specialist lawyers. The earlier you take action, the more likely it is that you will be able to come to an amicable resolution. Don’t let it build up into something that it doesn’t have to be.
What happens if one partner dies or goes bankrupt?
In the case of death or bankruptcy, a partnership will usually be automatically dissolved and the remaining partner must re-register for Self Assessment and can then continue to trade as a sole trader. If there are more than two partners, the partnership will be dissolved unless there’s a partnership agreement in place which contains a contingency plan.
Mediation and Alternative Dispute Resolution (ADR)
When it comes to business partnership disputes, court action can be expensive and time-consuming. For that reason, our lawyers almost always recommend Alternative Dispute Resolution (ADR) — particularly mediation — as a first step, in preference to immediate litigation.
In mediation, an independent mediator helps partners identify their key concerns and find common ground. It’s confidential, usually completed in a single day, and can preserve valuable commercial and personal relationships.
Our lawyers regularly prepare clients for mediation and can attend sessions to provide support and advice throughout. If mediation fails, we can then take decisive legal action to protect your interests.
Avoiding business partnership disputes
You cannot guarantee that you will never fall out with your business partner – but you can make the means of resolving any business partnership disputes as simple as possible. The best way to do that is by getting your lawyer to draft a partnership agreement dealing in more detail with how you want your partnership to be run – and critically how you want any business partnership dissolution dealt with. We can help you prepare or update a Partnership Agreement or LLP Agreement that clearly sets out:
• how you want to divide the profits and losses – with an indication of how much each of you have put into the business and setting out ownership percentages
• the mutual rights and obligations of each partner
• how to appoint any new partners
• methods of resolving any business partnership dispute, and in particular the use of alternative dispute resolution e.g. mediation
• circumstances when the partnership will be terminated
• what happens to the business if one of you becomes incapable or dies
• arrangements to allow for buyouts
Having these details agreed in writing significantly reduces the likelihood of future disputes.
