Partnership disputes - Resolve your Disagreement

Partnership and shareholder disputes

Partnerships in the UK are governed by the Partnership Act 1890. Business partnership and shareholder conflicts can occur in various scenarios. These can span from disagreements on business tactics to accusations of misconduct.

Such disputes can have a significant impact on a company’s stability and prosperity, presenting intricate challenges to address.

Specialised law firms focusing on partnership and shareholder conflicts offer valuable support to affected parties. They helping business owners to understand their rights and options and ultimately achieve a resolution.

Types of partnership disputes

Many different types of partnership disputes can arise in the course of business. A partnership dispute lawyer can be vital for resolving disputes between partners in an effective and amicable manner.

Business strategy disagreement

Partners or shareholders may have different ideas about how the company should be run. Disputes may include disagreements regarding funding options or staff, leading to disagreements and tension within the company.

Allegations of misconduct

One business partner or shareholder may accuse another of misconduct, such as embezzlement or fraud, leading to a dispute.

Deadlocks in management

Shareholders or partners may be unable to reach a consensus on important decisions. This can ultimately lead to a deadlock in the management of the company.

Breach of fiduciary duty

Shareholders or partners may accuse one another of breach of fiduciary duty. This type of breach can include misusing company resources or failing to act in the best interests of the company.

Oppression of minority shareholders

Disputes between minority and majority shareholders are common. Majority shareholders and senior Partners may be accused of oppressing minority shareholders. This can be done by making decisions that are not in the best interests of the company or by denying them access to be able to share equally.

Disputes over terms of partnership or shareholders agreement

There can be a dispute over the interpretation or applicability of certain clauses in written agreements, such as the partnership or shareholder agreement. Common disagreements include disputes in relation to restrictive covenants.

Unfair prejudice

An unfair prejudice claim is a legal remedy available under the Companies Act 2006 for shareholders of a company who have been treated unfairly by the company or by other shareholders.

Such claim can be made by a shareholder if they believe that the affairs of the company are being conducted in a manner that is unfairly prejudicial to the interests of its shareholders generally or to the interests of that particular shareholder.

Derivative action

Shareholders and partners are entitled to bring a legal action on behalf of the company, rather than in the shareholder’s own personal capacity.

A derivative action is used to pursue a claim against third parties, typically company directors, for breach of their duties to the company, or against other shareholders or remaining partners for unfair prejudice.

Settling Partnership disputes

Partnership disputes in the UK can be resolved through various approaches, depending on the unique circumstances at hand. Several common methods that can be used to resolve disputes include:

Negotiation and Mediation:

Parties engage in informal discussions or seek assistance from a neutral third party (mediator) to reach a mutually agreeable resolution and partnership agreement.

Arbitration:

Disputes between business partners can opt for arbitration, an alternative dispute resolution method where an arbitrator or panel of arbitrators is entrusted with resolving the dispute.

Litigation:

If negotiation or mediation fails, parties may resort to litigation. This will initiate court proceedings in the High Court, which possesses jurisdiction over corporate and partnership disputes. Litigation is much more time consuming.

Expert Determination:

Parties may agree to have an expert, such as an accountant or valuer, determine the outcome of the dispute instead of involving a court or arbitrator.

Compulsory purchase of shares:

In cases involving claims of unfair prejudice by a shareholder, the court may order the company or other shareholders to purchase the complaining shareholder’s shares.

Ultimately, the choice of the most appropriate resolution method for a partnership or shareholder dispute hinges on the specific details of the case and the preferences of the involved parties. While some conflicts may be swiftly and informally resolved, others may require formal proceedings. It is essential to seek expert advice from a solicitor in order to determine which method would suit your case.

Dissolution of the partnership:

The partnership may be dissolved as a remedy to a dispute. This can be done by agreement, or notice. A partnership may also be dissolved by court order in certain situations, which may arise from disputes. 

In some cases, other remedies may be more appropriate, such as negotiating new terms, removing a problematic partner, or seeking mediation/arbitration to resolve the dispute without dissolution. However, dissolution is often a last resort when the partnership cannot continue to function.

Why Choose us?

We only connect you with the best solicitors

All of the solicitors on our panel have the experience and expertise required when dealing with partnership disputes. Each solicitor is vetted before being allowed onto our panel and we only select the best in the business. They can provide you with the legal advice you require to achieve the optimal outcome on your case.

All of our solicitor firms and dispute resolution teams are authorised and regulated by the Solicitors Regulation Authority (SRA).

Our legal teams also help with commercial claims, such as breach of contract and CCJ removal.