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A member asked almost 9 years ago

Does a partnership exist?

I had a partnership type business venture with a friend, but he now wants to incorporate a company with unequal share holdings. I want there to be a partnership as originally agreed. Can I force there to be a partnership if there was no actual signed agreement?

Partnerships Formation and dissolution VIC AU
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Law Advisor Research Team
Law Advisor Research Team
Researchers at LawAdvisor
Your original business arrangement with your friend sounds like it may have been a legal partnership, even though you never signed a partnership agreement. Whether a partnership existed will depend on how the capital and property of the business venture was managed, how the profits were divided, and how the business interacted with third parties.
If a partnership existed, this means that, under Victorian law, each partner is entitled to share equally in the capital and profits of the business and must contribute equally to any losses. Unless you reached an express or implied agreement with your friend to the contrary, you are entitled to 50% of the partnership property.
As a general rule, a partner has authority to bind the whole partnership. This means your friend has the power to sign legal documents on behalf of the partnership, such as incorporation documents. However, incorporating the business would be a significant change to the nature of the partnership business and therefore cannot be done without your consent.
Your friend may decide that he wants to leave the partnership, which he is entitled to do if there is no agreement otherwise on how to end the partnership. Upon your friend leaving, the partnership will dissolve and each partner will be entitled to half the partnership property.

Suggested way forward

Your situation raises several legal issues that, depending on the size of the business, may involve significant legal or financial risk. You should consider speaking to a lawyer who can advise you on the full range of legal options that may be available to you. By pressing the “Take Action” button, LawAdvisor can help you search for experienced lawyers and obtain fee proposals for their services. Costs for legal advice and representation will vary between providers based on experience and the scope of services.

Answered over 8 years ago   Legal disclaimer

Brennan Ong
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