Partnership Dispute Lawyers in Melbourne

When your business partner becomes the problem

Your partner has stopped turning up but still draws their share. Or the till is short, the BAS is late, and the answers have stopped coming. You built this business together, and now every week of stalemate costs you money and clients. Partnership breakdowns reward the partner who gets advice first, because the Partnership Act 1958 (Vic) hands out rights you may not know you have, and rights your partner may already be using against you.

Before you send the ultimatum, call MK Law on 1800 130 120. The first call is free and confidential.

No written agreement? The Act decides for you

Plenty of Melbourne partnerships in trades and professional services run on a handshake. When they break down, the Act’s default rules apply, and they surprise people:

• Partners share capital and profits equally and bear losses equally, regardless of who invested more or worked harder, unless you can prove a different deal.
• Every partner may take part in management. You cannot simply lock a difficult partner out.
• Any partner in a partnership at will can dissolve the firm by giving notice to the others. They do not need a reason, and there is no warning period beyond the notice itself.

That last rule cuts both ways. It is your exit if you want out, and it is what your partner can do to you if they serve notice while you are unprepared. Either way, the terms of the wind-up get negotiated in the weeks that follow, and preparation decides who negotiates from strength.

Partners who later move the business into a company get one clean chance to close all of this off, because a shareholder agreement can set the exit price, the valuation method and the restraints that the handshake never covered.

Do not empty the account, change the locks, or start moving clients across to a new entity. Those moves all feel fair at the time, and they read as misconduct when they turn up in an affidavit later. The partner who keeps clean hands and gets a lawyer in early almost always exits on better terms.

When the court will dissolve a partnership

If your partner will not agree to end things, the Supreme Court of Victoria can do it for you. The grounds cover most real breakdowns: a partner permanently incapable of doing their part, conduct that is damaging the business, persistent breaches that make carrying on together unworkable, a business that can only run at a loss, or anything else that makes ending it just and fair. In practice, a well-evidenced dissolution application usually produces a negotiated exit before a judge ever rules on it.

What happens to the money

On dissolution, the law sets the waterfall: outside creditors first, then partner loans, then capital contributions, with the surplus split in the profit ratio. The real argument sits above the waterfall: what the business is worth, how goodwill is valued, who keeps which clients, and who takes over the lease and the employees. A well-drafted exit deed answers all of it in one document. Litigation answers the same questions two years later and usually less well.

How we get partners out clean

We start by stabilising the position: bank authorities, client communications and supplier accounts get locked down so nobody can bleed the firm while terms are negotiated. Then we build the accounts picture, brief a valuer where the numbers are contested, and push for a mediated exit deed covering price, clients, restraints, the lease and the debts. Where the other side will not deal, we file for a court-ordered dissolution and let the prospect of a forced wind-up move them. Personal liability makes speed matter: while the partnership limps on, each partner can still bind the others. Once the firm’s debts have outrun what the partners can pay, the question stops being what your exit is worth and turns into whether bankruptcy or one of the personal insolvency agreements that sit short of it is the way out.

If your business runs through a company rather than a partnership, the levers are different. Start at our shareholder disputes page, and if the fight is with a co-director, see director disputes. Where the firm is insolvent rather than merely deadlocked, the wind-down is a job for our insolvency lawyers.

Talk to a Melbourne partnership dispute lawyer

Whether you want out, want your partner out, or want the business to survive both of you, the first step is the same. Call 1800 130 120 or use the form on this page. The call is free, and you will come off it knowing where you stand and what to do this week.