partnership split?

Question

my wife and brother run a small business In the UK, they have fell out and because of his bullying she walked out , she has asked him to buy her out , but he is stalling and refuse's to pay her any wages/money...... where does she stand?

Answer 1

All the boomph on here about all partnerships being formed by written agreement is tosh, a partnership can be formed in the same way as a contract; it can be written, oral , or implied. For practicalities sake it is usually formed in writing and is known as the partnership deed (it is usually formed by deed). Tell her to look for this. If there is no such document then the partnership is governed by the partnership act 1890.

Firstly, I need to make you aware that a partnership (unless a limited liability partnership) is not a seperate entity from the people in it, as such it cannot be sold or the other partner bought out; aswell as this the partnership does not benefit from perpetual succession meaning that if your partner is withdrawing from the partnership, the business is at an end - the profits from the business must be shared accordingly and the assets of the business disposed of.
A partner always has an absolute right to be involved in the running of the business and view the accounts, unless he waives that right(known as silent partner) although they may not necessarily be salaried - of course on a practical level if your wife is unsalaried then so should her brother be.
Her brother may be acting illegally in continuing the business when you have withdrawn from it, I personally would be very worried about this as the actions of a business partner are binding on all other partners and if he is running up massive debts within the business you will liable to pay a proportion of these debts.
Obviously I do not know the full details of the case and as such am a little uncomfortable with commenting further, however, I would strongly advise that you go and see a local solicitor to ensure the partnership is dissolved and that your wife gets her fair share of the partnership and not a hefty bill ran up by a disgruntled relative.

Answer 2

See you solicitor indeed, or at least the Citizen's advice bureau.

If they do Internet business, do a whois on the domain name on www.allwhois.com and see who is the registrant of the domain (the owner). See who you are hosting with too ang back up the website asap. Contact your host and registration agent as if one of the two parties throws a wobbly and pulls down the site, the business will suffer big time. I deal with this al day at work, I can tell you businesses like that go fast down the pan if the partnership breaks down.
If it's a .uk domain and the partnership gets dissolved, Nominet UK will pull the plug on the domain.
Whatever happens between your wife and her brother, the thing to do now is to try and save the business for everyone's sake. Then they can kiss and make up :)

Good luck to them.

Answer 3

Most partnerships are formed by written agreement. Check the agreement to see if the usual "shotgun" clause was included in it. That clause addresses the event of a dissolution. Normally it allows for one partner to offer to buy the other one out. In the event the other partner refuses to accept, then that person must pay the offered amount to the first partner and buy him out.

That being the case, your wife should make a formal offer to her brother and if he fails to accept it then he must buy her interest for the amount she offered.

If there is no formal partnership agreement then there never was a legal partnership and she should probably walk away and consider it an expensive lesson in business.

Answer 4

If it's a partnership then as long as they have a partnership agreement she is entitled to half of the company's assets and liabilities and in order to protect herself she should seek action through a solicitor in order to ensure that the partnership is rescinded and any monies owing are resolved. If not, then if he now runs the business into the ground out of spite she is "jointly and severally liable" for all it's debts - which in practice can be very expensive indeed.

This happened to my father who left a partnership 8 years before it became insolvent but had failed to remove his name from the agreement - it cost him over 100,000 pounds as he had to pay all the debts, the other partners were either bankrupt or living overseas. Nice eh? Not.

Answer 5

Yes see a solicitor...but they will run up a large bill very quickly..... however what I would do is say that you have someone else who will by your share in the business, but you are offering it to your brother first..............also say that he has 5 days to accept your offer or you will sell to this other person.........who your brother will then have to work with........I know its not true but try the bluff, because it might work.......if it does not work.......then go to the solicitor.....good luck.

Answer 6

There should be something in the patnership agreement about what action to take if the partnership splits due to disagreement . If you can't find it or didn't create one, you will need to seek legal advice.

Answer 7

Start by rectifying the rift and then get your partnership ducks in order, in other words, check the contract and go from there if you have one, if not, see a lawyer

Answer 8

She will have to refer to the contract and liase with her solicitor in order to see what she is entitled to. Then she can sue him and he is then ordered to pay what she is owed by law.

Answer 9

see your solicitor