If you are involved in a partnership dispute or are considering the dissolution of a business partnership, the Partnership Act provides a number of grounds to go to Court and seek an order for the winding up of a partnership.
Personal and financial reasons to seek the ending of a a partnership
The partnership laws allow for a partner to approach the Court for orders dissolving a partnership when the business of the partnership can only be carried on at a loss.
The Court may also make orders for the dissolution of a partnership when a partner becomes permanently incapable of performing the partner’s part of the partnership agreement or when a partner is of unsound mind and incapable of managing his or her affairs.
Ending a partnership for dispute resolution reasons
At times, business disputes within a partnership can be the basis for going to Court and seeking orders for the dissolution of a partnership.
The Court has the power to order that the partnership be dissolved when one partner has been guilty of conduct that is calculated to prejudicially affect the carrying on of the business of the partnership. A Court may also make an order when a partner wilfully or persistently commits a breach of the partnership agreement, or otherwise conducts himself or herself in such a way that it is not reasonably practicable for the other partners to carry on the business in partnership with the offending partner.
A further ground that may be relied on is the ground that it is just an equitable that the partnership be dissolved. The circumstances that a Court might consider under the just and equitable ground are such things as:
1. fraud, mismanagement or oppression in the management of the partnership;
2. the substratum or common intention between the partners is gone and the objects of the partnership cannot be achieved; or,
3. where there is a deadlock in the management of the affairs of the partnership.
The above is not an exhaustive list but indicative of the things a Court might take into account. The scope of the matters that can be raised in Court is very wide.
What happens if the Court makes an order dissolving a partnership
Usually, the partnership enters into receivership and an independent receiver is appointed to the partnership. The role of the receiver is to preserve the property of the partnership and wind up its affairs. That will usually involve a sale of the business of the partnership, payment of the debts of the partnership and the payment of any funds leftover to the partners.
Partnership disputes and civil litigation can be costly if you don’t make the right decisions, you need expert business law and litigation law advice. Go to our contact page, send us an email or submit an enquiry using the form on the right side of your screen. Our professional staff are waiting to help you with your dispute resolution needs.
