Breakup of a partnership - Advice

Hi,

I am looking for advise on the breakup of a business partnership. I will try and keep it brief and to the point.

I had been in partnership with a very good friend for a little over 3 years. It started out quite casual as nixers as we were both employed. We got so busy we just went into partnership together. Anyway it all went wrong and he decided he longer wanted to be in partnership. Gave no reason and refused to discuss same.

Before he told me about the decision he took €25k out of the account with the agreement that I would take the same. I only took €15k as there was bills to be paid by the business Then he dropped the bombshell and low and behold there is no money for my €10k.

This is how it stands:

• There is still creditors owed money
• He agreed to paid me €5k personally but never has and won’t answer my letters or phone calls
• He went around and got paid for jobs that we both carried out
• He also used our joint equipment for new jobs
• He kept a 42” plasma TV we had purchased for a job

WE HAVE NO PARTNERSHIP AGREEMENT. I know this is a huge problem and I realise how stupid this was / is.

Is there anything I can do? We obviously had a joint account showing the money that was debited etc.

Any advise greatly appreciated.

Re: Breakup of a partnership - Advise

You did have a partnership agreement. It's just that it was not written down. A verbal agreement is sufficient in law to create a partnership. Unless you have agreed otherwise in writing, profits and losses should be divided equally. The partnership ceased on the date that your partner told you he wanted to quit.

If you have good financial records, anybody who is competent in accountancy should be able to calculate how things stand between you. Money that your partner collected that was due to the partnership should be included as partnership funds. Any item that was purchased for the partnership (like the TV) should be reckoned as a partnership asset. There is room for argument about income that was earned using equipment belonging to the partnership, and it might be deemed partnership income.

As a first step, get the help of an accountant.

Re: Breakup of a partnership - Advise

I'd start with a solicitor first - the accountant can come in to bayonet the dead afterwards.

Re: Breakup of a partnership - Advise

Complainer said:

I'd start with a solicitor first - the accountant can come in to bayonet the dead afterwards.

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The law is clear enough. The facts need to be established, and that is what an accountant can do.

If OP goes to a good solicitor, the advice would likely be to get the accounts drawn up so the amount to be claimed is clear.

Re: Breakup of a partnership - Advise

Padraigb said:

The law is clear enough. The facts need to be established, and that is what an accountant can do.

If OP goes to a good solicitor, the advice would likely be to get the accounts drawn up so the amount to be claimed is clear.

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I'd have thought that a good solicitor's letter to the other guy might well put manners on him and eliminate the need for further chasing.

Re: Breakup of a partnership - Advise

Complainer said:

I'd have thought that a good solicitor's letter to the other guy might well put manners on him and eliminate the need for further chasing.

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I don't go for the "solicitor's letter" approach to things. A solicitor's letter is nothing more than a letter written by a solicitor on behalf of a client. Some are good; some are bad. Some of the bad ones are written when a solicitor tries to deal with financial matters without having clear information and resorts to bluff or vague legalistic-sounding threats.

In a case like this, a good letter making a claim against a former partner would boil down to: "You owe me €x. Here is a statement showing how the amount is calculated. Please pay me by such-and-such-a-date or I will bring you to court." Personally, I would write my own letter of claim, but I know that it is common for people to engage solicitors to do such work.

Note the sentences in boldface. That's why I say go to an accountant first.

I wouldn't disagree with you about solicitor's letter, but they will often have the desired impact. My main concern about going to the accountant first would be timing. It is going to take the accountant anything from 2-4 weeks to get their heads around this and come up with a report. In the meantime, the other party is continue with screw around with the partnershp's money.

Hence the recommendation to get a solicitor's letter out to him as a matter of some urgency.

I believe partnerships where there is no written agreement are covered by the standard terms imposed by the Partnership Act, 1908 (?? - not sure about the year). You might have a look there.

Dont send a solicitors letter as it is too early to do this. You were/are friends. Calculate how much money is owed and how much of a surplus/deficit there is and then try to get the money from your fellow partner. Only if you have no joy with this would you begin to get a solicitor involved.