Nimbus

Morning SNers..

Need a bit of advice.

Two people set up a business partnership and both invested money and effort into the business. Now one person no longer wants to continue (person A). At first they said they wanted to be bought out, but now say they want the partnership to de disolved. The second person (B) still wants to continue and would be willing to buy person A out (but not at the cost price of their share of investment, since person A believes it is not worth the initial investment). The business is not a going concern and has made little money so far.

My questions are..

1) can person A force the business to be disolved even if person B still wants to continue?

2) If person A does now not want to be bought out, or rejects the value of the offer to buy out, but only wants the business to disolve, how can it be resloved?


Thanks

Brendan Hughes

Are your As and Bs correct?

Nimbus

Yes. Where's the confusion?

A = no longer wants to continue
B = wants to continue

Can A force the business to disolve if B still wants to contine?

There was no Partnership Agreement in writing. Only verbal.

Thanks

Bluie

Is there nothing in the original Partnership agreement to cover this, as my business partner and I have an agreement in place.

Also agree are you As and Bs correct

davegtt

Question number 1, you ask can B force it to disolve, thought B wanted to keep it open. a quick edit should sort it out

Nimbus

Doh!!!! Thanks...

Edited...

Brendan Hughes

Q2 still wrong

Did you say the business wasn't very successful?

Jonathan Davies

They seem a bit mixed up in the last bit... but:

Have they got a written partnerhsip agreement? If not, the default provisions of the Partnership Act 1890 will apply... not the most up to date bit of business legislation as you can imagine. If the default stuff applies, then either partner can give immediate notice of his intention to dissolve, and dissolved it will be. There are no buy-out rights, still less valuation provisions, in the law - these only apply if they have agreed different partnership terms.

So, unless they have an agreement otherwise:

1) if A wants too dissolve, there's nothing B can do about it.

2) there's nothing to resolve. Either partner can dissolve it on notice, and they'll split assets/debts equally (again, unless something else has been agreed).

Jonathan Davies

A verbal partnership agreement isn't worth much. If not written down, hard to prove what was agreed now.

Spoon

Lets hope the business isn't designing maps for getting from A to B.

Nimbus

Johnathan,

Thanks. Just reading the Act from the Gov website. As you say, if the a partner wants to disolve the partnership, there's nothing B can do about it.

My third question is if the partnership is disolved and exsiting assests split, can A stop B from re-launching the website and comapany with their own funds?

Nimbus

Thanks (again)..

It's had some sucess, but is early days. Let's just say it's a clash of personality...

Nimbus

I just want to make it clear (due to my in ability to distiguish between A and B)...

B is not bothered that the partnership is disolved, and only want to continue trading with the original company. A is stating they want the website closed as part of the disolution of the partnership. Since B put time and effort into this and feels it would be worth continuing on their own, they do not want to close the website or have the business itself stopped.

Jonathan Davies

Wouldn't have thought so. Depends whether the website and the brand/trading name are assets that are split up on dissolution. Might be possible to divide the assets in such a way that both A and B get equal value, but A retains the assets he wants to enable re-launch... but it might not be, if (say) the website is the only asset of value. Maybe A and B could agree a division of assets where one person gets cash and another assets/property rights? Effectively buying out really, so maybe not.

Not sure really... I do investment funds not trading businesses! What I would say though is be careful with partnerships. partners are supposed to account to the partnership for everything they earn* (!) unless agreed differently... so i would want a formal written dissolution of partnership asap and definitely before doing anything in the way of starting the business again.

* through or because the firm, but this can be contentious.

Brendan Hughes

I thought Diablo was good at these kind of questions.

Does A have anything to lose by the business staying open? Is it a "reasonable" request to force all to shut down (I don't know, some sort of risk of damage to a well-established reputation)?

Jonathan Davies

Is there a limited company inloved? I'm confused... a company in legal terms is a separate entity/person - a partnership isn't, it's like a joint venture of individuals. Did A and B jointly own a company? Or did/do they own a bunch of assets and a trading business?

Nimbus

Basically, A and B had a joint idea to sell perticular stock to a perticular market. Each had a telent to bring to the business and each invested equal money on developing and buying stock, though A and B had different strenths and developed different products. B also developed a website which would be the main selling tool. A and B jointly sold stock at craft fairs which brought in some money and helped as a lauch for the website.

There was no "company" setup, only a verbal partnership agreement to split costs and profits. So, A and B jointly own the assests (stock) and, up until last month) the hosting fees for the internet site. The website is in the name of B and is paid out of their personal account. I guess you could say that the "partnership" owns the trading name, but A has nothing to loose by it continuing under Bs sole ownership. B thinks that As request to close the website is done for personal reasons.

Jonathan Davies

Well, it sounds like the website is partnership property probably.

In practice, though, what's he going to do? Get an injunction to prevent B operating the website or a similar one? Not likely really, unless he's got cash to burn and nothing better to do. Maybe B should just agree to whatever B wants then quietly revive the notion in a new business... most laudable to want to do it nicely and correctly, but in terms of risk I think that's pretty low.

Spoon

B should agree with himself at all times.

FFS, it's not difficult!!