When Business Partnerships Break Down: How we can help you to find the right way forward

Running a business with a family member or close friend can be rewarding – built on trust, shared goals, and years of personal connection. But when things start to go wrong, partnership disputes can become some of the most difficult to navigate.

They’re not just about money or contracts. They’re about relationships, history and the future of something that’s often deeply personal.

I regularly help partners in family-run and owner-managed businesses – particularly in the agricultural and property development sectors – when those relationships start to fracture. Whether it’s a disagreement about ownership, decision-making, or simply how the business should move forward, there are clear legal and practical steps that can bring structure to the situation.

The Role of the Partnership Agreement

The best starting point in any partnership dispute is the partnership agreement – if one exists.

A well-drafted agreement sets out how the partnership should operate, how profits are shared, and what happens if one partner wants to leave or the partnership needs to end. It can also deal with capital contributions, drawings, decision-making, and dispute resolution mechanisms.

When there is an agreement, it acts as the roadmap for how to resolve the dispute – giving clarity when communication between partners has broken down.

But in many small or family-run businesses, no formal partnership agreement was ever written. Instead, people rely on long-standing understandings, conversations, or family traditions. When relationships sour, that lack of formality can create uncertainty – but it doesn’t mean you’re without protection.

When There’s No Agreement: The Partnership Act 1890

Where there isn’t a written agreement, the Partnership Act 1890 steps in and fills the gaps.

It’s a piece of legislation that has stood the test of time, and for good reason – it sets out a simple, logical framework for how partnerships operate and how they can be brought to an end.

Under the Act:
– All partners are entitled to share equally in the capital and profits of the business.
– Every partner has an equal say in the management of the business.
– No partner can be expelled unless the partnership agreement allows it.
– If one partner gives notice to dissolve the partnership, that generally brings it to an end.

While those rules can seem rigid, they provide a clear and fair baseline – especially in the absence of written terms. They often form the starting point for working out what each partner is entitled to if the business relationship can’t be salvaged.

My Approach to Partnership Disputes

Every dispute starts with understanding the real dynamics – both personal and commercial.

Step 1: Analyse the situation
I begin by clarifying the factual and legal framework: what was agreed (formally or informally), how the partnership has operated in practice, and what assets or business interests are involved.

Step 2: Can the relationship be repaired?
If there’s still some common ground, I focus on whether the partnership can be repaired or restructured. That might involve redefining roles, adjusting profit shares, or putting in place a new agreement to move forward. Sometimes, restoring communication and setting clear expectations can get the business back on track.

Step 3: If not, move to fair division
If the relationship has broken down beyond repair, the focus shifts to ensuring a fair valuation and division of the partnership assets, having regard to the circumstances of the case. That might include land, property, stock, or ongoing business contracts.

In these cases, it’s about preserving value – not wasting it on prolonged disputes. I work to ensure each partner’s entitlement is properly recognised and that any dissolution or buyout happens in a structured, commercially sensible way.

The Role of Mediation

Mediation is one of the most effective tools available in partnership disputes – particularly when the partners are family members or long-standing friends.

As a qualified Mediator, I’ve seen first-hand how a structured discussion, guided by an independent third party, can transform a deadlock. Mediation creates a confidential setting where each partner can be heard – not just legally, but personally.

It’s especially useful because it can serve two purposes:
– Repairing the relationship – where there’s still a chance to continue the business, mediation helps rebuild communication and trust.
– Resolving the separation – where the partnership must end, mediation helps agree fair terms for valuation, asset division, and exit, often more efficiently than litigation.

Even when court proceedings are already underway, mediation can help break the stalemate and save both sides considerable time, cost, and emotional strain.

My approach is to bring that same mediation mindset into every dispute – focusing on resolution, even when we’re fully prepared to litigate if necessary.

Agricultural and Property Partnerships

Many of the partnership disputes I see arise in farming or property development contexts – where assets are significant, and family involvement blurs the line between personal and business interests.

In these cases, understanding how the business has evolved is key:
– Has land been brought into the partnership?
– Were assets held personally or in the partnership name?
– Have profits been reinvested, or distributed informally over time?

These questions shape both the legal analysis and the practical solution. Often, the most effective outcome combines legal precision with sensitivity to family relationships and long-term succession planning.

Finding Resolution

Partnership disputes can be emotionally draining and financially risky – especially when the partners are family or close friends. My role is to bring structure, clarity, and momentum.

I focus on early analysis, realistic advice, and a clear strategy – whether that’s to rebuild the partnership, negotiate a buyout, or dissolve the business in a way that’s fair and efficient.

The goal is always to protect the value of the business while helping clients move on with as little damage as possible – commercially and personally.

Contact Us

If you’re facing a dispute with a fellow director or shareholder, get in touch for tailored advice on your next steps or connect with Chris Clayton on LinkedIn and send him a direct message.

DISCLAIMER: The information provided on this blog is for general guidance only and does not constitute legal advice. If you require tailored legal advice, please contact us to discuss your specific circumstances.

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