Partnership Disputes: Minor Disputes Between Business Partners

In this article, we’ll explore the common triggers for business partnership disagreements, examine your legal rights and obligations under UK law, and provide practical guidance on resolving these issues without necessarily engaging a solicitor. We’ll also look at how CaseCraft’s platform can support you throughout this challenging process.

Common Partnership Disputes and How They Arise

Typical minor partnership disagreements often stem from miscommunication, bad agreements and clashing expectations. Typical common causes of disputes are: 

• Disagreements regarding financial contributions (e.g. one partner alleges to have invested more than agreed) 
• A partner feels like they are handling most of the work
• Taking business assets or funds for a different use than the agreed
• Breaking a verbal or informal agreement, such as those related to revenue sharing or client sharing, can lead to misunderstandings and disputes.
• Failure to uphold obligations such as deadlines and causing difficulties for the client.

Whether you have a formal partnership agreement or not, partners have legal responsibilities to each other and are liable for the business’s obligations. Rather than waiting for the problem to escalate, it is essential to resolve the partnership dispute early.

Legal Background: Rights and Duties in Partnerships

If you are operating a general partnership (not a limited liability partnership), the Partnership Act 1890 will govern your rights and responsibilities unless you have a written partnership agreement that states otherwise. It is important to note that the Act states the following:

• Each partner will have an equal voice in the business.  
• Profits and losses will be shared equally among partners.  
• Partners must act in good faith and prioritise the interests of the business.  
• Partners are jointly and severally liable for the business’s debts and obligations.  

In the absence of a written agreement, the courts will refer to the Act, which may cause frustration if one partner believes their contributions or investments entitle them to a larger share or more control. 

When Should You Take Legal Action?

Disagreements do not always have to follow a legal path. Usually, a formally structured dialogue or mediation is sufficient to resolve any minor dispute. However, you might consider legal action in cases when: 

• The disagreement involves a specific amount of money due to you
• One partner has acted contrary to your clear verbal or written intention
• You have put an effort into resolving the matter, and the other party will not cooperate
• The dispute has affected your income, business, or reputation 

And if the dispute relates to less than £10,000, you can go to the small claims court, an affordable route for claiming or recovering lost money without the help of a solicitor.

What Evidence Do You Need to Make a Claim?

To put together a solid case, you will need to demonstrate that your partner has violated an agreement or caused you harm that can be measured. Potential evidence will include: 

• Written or email communications that show the original expectation 
• Invoices, proof of payment, or bank statements
• Proof of work you have completed or financial contributions made 
• Statements from witnesses who might be clients, employees, or a third-party  

The more transparent your evidence is, the better chances your claim has for success.

Steps to Take Before Making a Claim

Step 1: Discuss the Dispute Openly

Attempt to resolve the situation amicably. Explain what you expect and how you think the issue may be resolved. Write down what you discussed, results included, in any format you choose.

Step 2: Send a Formal Written Complaint

If you cannot resolve the matter informally, send a complaint letter to your counterparty that will specify their position, detail the breach they believe has been made, and specify what outcome they are looking for.

Step 3: Send a Letter Before Action

If you do not receive a satisfactory response within 14 days of sending your letter, write a Letter Before Action (LBA). This letter serves as a notice that if the issue is not resolved, you will pursue legal action. Taking this step often leads to a settlement.

How CaseCraft Helps You Take Action

Disagreements with business partners can be emotionally complicated and professionally challenging. CaseCraft simplifies the legal for you so you can focus on resolving the dispute as effectively as possible. With CaseCraft, you can: 

• Determine if you have a claim and what evidence you might need 
• Visibly picture your documentation and timeline 
• Create compliant legal documents, including your Letter Before Action
• Proceed with a small claim without using legal representative services
• Avoid common mistakes that slow down claims or weaken evidence

CaseCraft gives you the capacity to pursue professional, straightforward and cost-effective legal action, even if you have never approached the courts before.

Possible Outcomes

If you move forward with a small claim, the dispute may result in the following outcomes: 

• A negotiated settlement after your Letter Before Action 
• A court order for compensation or reimbursement 
• A decision that clarifies obligations between partners 

In many cases, all you need is to demonstrate you are serious in your intentions and sufficiently well-organised for the court to encourage cooperation or payment.

Final Thoughts: Minor Disputes Can Be Managed Constructively

Disagreements are common among business partners. However, these disagreements do not have to lead to the failure of the business. You can often resolve disputes and prevent business collapse by approaching disagreements constructively, understanding your legal rights, and following a transparent process. This process adds value by addressing disputes and conflicts professionally, ultimately helping to avoid additional costs and expenses.

Using the set of CaseCraft tools, you can easily follow the legal process without the need to hire a solicitor.

Start Resolving Your Partnership Dispute Today

If you have a minor partnership dispute affecting your business or finances, CaseCraft is here to help you. We will assist you in gathering evidence, preparing documents, and acting legally on your own terms.

Seize your opportunity to contribute to a better outcome, and begin your claim with CaseCraft today.