Partnership Agreements and Partnership Disputes

A partnership can be a simple and inexpensive business structure.

However we often see disputes between partners due to disagreement surrounding the roles of each partners, the direction of the business and how money is distributed.

For 25 years we have helped clients resolve their partnership disputes.

Sometimes the dispute cannot be resolved without court action and we have regularly represented partners in court proceedings in all courts in litigating all partnership disputes over capital and the running of their businesses.

Because our offices are not located in the CBD our rates are substantially lower, often up to 20% lower, than most commercial law firms.

We can assist you in avoiding a dispute or assist you in resolving a dispute that has already occurred.

In Western Australia, the operation of a partnership is governed by common law principles and the Partnerships Act 1895 (WA) ('Act').  Section 7(1) of the Act defines a partnership as 'the relation which subsists between persons carrying on a business in common with a view of profit'.  Section 7(2) of the Act also states that 'In deciding whether a partnership does or does not exist in any particular case, the court shall have regard to the true contract and intention of the partners as appearing from the whole facts of the case'.

The key characteristics of partnerships include the following:

* the partnership does not have a separate legal identity like a corporation and is represented by its individual partners;

* the relationship between the partners is governed by a partnership agreement between the partners, such as their voting rights and rights to a distribution of profits;

* the partners have unlimited joint and several liability for all of the liabilities of the partnership but may seek contribution from each other; and

* subject to applicable law in certain circumstances, the partnership may distribute profits as it sees fit but each partner is taxed at his or her personal taxation rates.

Before establishing a partnership it is important to work out the following:

  • The role and authority each partner will have;
  • The financial contribution each partner will make;
  • A clear procedure to be followed if a dispute arises;
  • A clear procedure for how to end the partnership.

We prepare partnership agreements that clearly define how the partnership will operate to avoid disagreement and to reduce the risk of disputes arising between the partners. 

We can also advise you on how the resolve a partnership dispute in a cost effective and quick manner.

For information on how partnerships can be wound up click here - http://www.ahernslawyers.com.au/latest-news/dissolution-of-partnerships/

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