Exiting a partnership at will can be tricky

Most partnership disputes come down to interpretation of a written agreement but what if there is no agreement?

What happened?

We were asked to advise an individual who decided to leave a partnership at will.  He had invested capital and there was a standing (unwritten) agreement on the distribution of profits.  The issues to be dealt with were how to get out his capital, what share of profits he was entitled to up to the point of leaving, what, if any, restrictive covenants were in place, and most particularly what obligations he had to disclose his future plans.

How did we help?

Unwritten partnerships are subject to the 1890 Partnership Act (not a particularly contemporary piece of legislation!).  The Act sets out duties of partners including that the relationships should be underpinned by utmost good faith.

We assisted our client in negotiating the terms of his departure (“retirement”) and advised him that whilst he was not free to use any confidential information belonging to the partnership, he was otherwise unrestricted from the day he left.