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Dissolving a business partnership without hurting your interests

On Behalf of | Feb 17, 2023 | Contract breach

Sometimes in business things simply fail to work out as expected. If a business partnership is no longer tenable, the only sensible thing you can do is dissolve the partnership so each party can go their separate ways. 

No matter the reasons, if you decide to sever business ties with a partner, it is important to ensure that your interests are safeguarded. This benefits you, the business as well as your former partner. To dissolve a partnership successfully, it helps to start by understanding some of the valid reasons why you might want to take this route in the first place.

Legal reasons for dissolving a business partnership

Every business partnership is governed by some form of a contract. Thus, as much as you might want to, you cannot merely wake up and decide to call it quits. 

That said, there are valid grounds upon which you can dissolve a business partnership. Here are some of these grounds:

  • Expiry of the partnership term – When the partnership has a definite timeline, both parties can decide to sever ties once the partnership term is through
  • Strained relationships – when partners disagree to the point of getting personal, it can only be sensible that they mutually agree to dissolve the partnership
  • Partner conduct – theft, mismanagement of business funds, conflicts of interests and incompetence are some of the valid reasons why you might want to dissolve a partnership

Dissolving the partnership

Even after agreeing to go separate ways, it is still important that you follow the right steps while ending the business partnership. Here are some of the steps you need to take when dissolving a business partnership:

  • Review the partnership contract with a specific focus on the dissolution clause 
  • Notify your partners of your desire to end the partnership and give reasons where appropriate
  • Formally begin the partnership dissolution process as specified in the dissolution clause

Just as with starting one, ending a business partnership is a big deal. Find out how you can protect your rights and interests while severing ties with your business partners.