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3 reasons you may want to dissolve a business partnership

On Behalf of | Jul 28, 2023 | Business Contracts |

Most business partnerships start off on a positive note. The partners are often excited about the prospects that the partnership is about to bring.

But business partnerships and romantic partnerships have something in common: when the honeymoon phase is eventually over, frictions are bound to happen. Unfortunately, not all partnerships can stand the heat of disputes. If partnership disputes get out of control or lead to irreconcilable differences, you may have no choice but to go your separate ways. But when exactly can this happen?

Here are three reasons why dissolving a business partnership may make sense.

When a partner is acting unprofessionally

When getting into business with a partner, chances are you signed a partnership agreement that, among other things, outlined each party’s obligations and entitlements. If a partner routinely violates the partnership agreement and, thus, exposes the business to unnecessary risks, then you may explore the possibility of dissolving the partnership. And if the violations cost the business money, then the responsible partner can be held liable for their actions.

Conflicts of interests

It is not uncommon for partners to have differing opinions regarding the direction the business should take. While some conflicts can be fixed by reviewing the initial partnership goals, dissolution may be an option if these differences become irreconcilable.

Still on conflict of interests, you may dissolve the partnership if one partner is using the business’ resources to advance personal interests.

Bad economy

Most people get into business to make money. If the business is doing badly you may consider closing it down and, with this, dissolve the partnership. Likewise, bankruptcy can justify the dissolution of the partnership.

The decision to end a business partnership is one that you should never take lightly, especially if you signed a contract. Learning more about partnership laws can help you safeguard your interests when severing ties with your business partner.

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