Q. My brother and I started doing some weekend side work a few weeks ago. I set up a website to allow easy booking, recurring appointments, and payments, etc. At the start, I did all the technical work and about a third of the physical labour on the ground – my brother did the rest of the physical work. We had a bit of a falling out recently and he has started doing things on his own. He has a list of our clients and is calling them, he has transferred a few quid from a joint account that we used to pay suppliers, etc. I still pass some messages from the website to him, but don’t see any of the funds. I don’t want to exacerbate things – but what are my rights?
Dear Reader,
The first thing you should consider is what formal legal entity the business had – it is likely you were a ‘simple’ partnership. You should confirm whether you ever incorporated as a business with a limited liability company or similar.
If you didn’t, it is likely your business would be termed a partnership. This would mean you both have what is known as ‘unlimited liability’ in respect of the business. It would also mean that ownership of assets, be they supplies, cash, or intangibles like client lists, becomes murky. For this reason, amongst others, most partnerships have a binding ‘partnership agreement’ which sets out the rights and responsibilities of each partner, how the business is to be run, and how disputes (as always happens in any business) are resolved.
If you do not have such an agreement, one must look at the Partnership Act of 1890. That confirms that you are entitled to the profits of the business. One partner is not entitled to exclude another from the running of the business. Partners cannot run a competing business, and must account for private profits made in the course of the business outside the partnership. Lastly, each partner owes every other partner what is known as a ‘fiduciary duty’, that is to say each partner is obliged to act in the best interests of each other and the partnership overall.
Ultimately, if the business has ended, you can try and wind up amicably, and reduce your agreement into writing. However, it does appear that moment may have passed. You are entitled to bring an application to the courts to wind up the partnership. Often, partners decide to engage in arbitration or some other method of dispute resolution so as to avoid delays and costs of litigation. You should not, however, let the matter lie. If your brother continues to run the business, you may be liable to any losses he may accrue.
This can be a complicated area – especially if you were carrying on business as a partnership without the benefit of a partnership agreement. You are strongly advised to consult your solicitor.