I've been operating a shop with a business partner for around 6 months. Unfortunately it's not worked out as we have turned out to be irreparable incompatible. She wants to now buy out my share of the partnership and I am happy to sell. However in the meantime she expects me to continue to work in the venture. Am I obliged to do so? What would it mean going forward if I was to refuse to further participate in the running of the business (I'm of course more than happy to provide answers to any questions she may have and help as I can from a distance)
QLD Winding up a Business Partnership?
- Thread starter Vickie Sayer
- Start date
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- Tags
- business partnership
Hi Vickie,
I think that someone needs to still be operating the venture, particularly if it is a partnership. Both partners have some obligation to the partnership and in any event, if the other partner is not running it, as a self protection mechanism you should know what is going on as partners can be jointly and severally liable for things and debts incurred/done in the name of the partnership even if they are not aware of it. I do get though the difficulty of you being there if the other partner is present too. I would therefore get out of the business as soon you can.
I think that someone needs to still be operating the venture, particularly if it is a partnership. Both partners have some obligation to the partnership and in any event, if the other partner is not running it, as a self protection mechanism you should know what is going on as partners can be jointly and severally liable for things and debts incurred/done in the name of the partnership even if they are not aware of it. I do get though the difficulty of you being there if the other partner is present too. I would therefore get out of the business as soon you can.
You'll need to consider the terms of the operating agreement between you, and the corporate entity under which you run the business. I understand you've said it's a partnership, but a partnership is a particular animal at law and it may be something else.
If the operating agreements between you set out what each person is expected to do and you breach that by not participating, it may jeopardise your payout.
If the operating agreements between you set out what each person is expected to do and you breach that by not participating, it may jeopardise your payout.
I agree with @Rob Legat - SBPL and @Paul Cott above in all respects.
Further...
When you say "in the meantime", to whattime period are you referring?
Are you referring to the period between when she agrees to buy you out,
and the time when she actually pays you?
Or to some other timeframe?
Like the Paul and Rob above, I am assuming that you have proper agreements in place
(which typically include clauses about dissolution of the partnership, entry and exit of partners, etc).
Are we correct in that assumption?
I ask because it's quite common for people to not have them or to have "never quite got around to it".
Is the partnership genuinely irretrievably broken down?
Or is there some hope for negotiating a solution?
Further...
When you say "in the meantime", to whattime period are you referring?
Are you referring to the period between when she agrees to buy you out,
and the time when she actually pays you?
Or to some other timeframe?
Like the Paul and Rob above, I am assuming that you have proper agreements in place
(which typically include clauses about dissolution of the partnership, entry and exit of partners, etc).
Are we correct in that assumption?
I ask because it's quite common for people to not have them or to have "never quite got around to it".
Is the partnership genuinely irretrievably broken down?
Or is there some hope for negotiating a solution?
Disputes between partnership company directorship are very exacting financially. 65% of startups failed due to conflict of partnership so my first advice to resolve your problem personally. Yes, you have to work in the venture or responsible for the business until the partnership ended. sometimes a partnership can be very conflict and confusing so it's always advisable to hire best corporate lawyers, who can understand the circumstances of clients and provide the best outcome.
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