Solicitor chasing me for ex-business partners debt

Discussion in 'Legal' started by mr_nev, Mar 22, 2009.

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  1. mr_nev

    mr_nev UKBF Newcomer Free Member

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    I used to run a small plumbing and heating business with one other plumber. I left the business at the beginning of 2008 but since then my ex partner ran up £2600 worth of debt on an account at a local plumbing and heating firm.

    The account was his, he is the only person who signed anything to set it up and he was the only person who ever used it, therefore all receipts will have his signature. The only thing that relates the account to me is the fact that he used the company headed note paper to open the account.

    A solicitor has contacted me chasing the debt, I told him that the partnership was nolonger in existence at the time the debt was built up, he has asked for documentary evidence of the date of dissolution and written notice given to the client (the plumbing supplier).

    I don't have any of this but I did get my ex business partner to sign a letter confirming the the date we stopped working together, that account was solely his and that the debt was nothing to do with me. The solicitor said that its not valid and to end the partnership officially I had to advertise the dissolution in the London Gazette.

    Is he correct? Am I liable for this debt?

    Thanks you for taking to time to read my query, I hope you can help.

    Thanks again, Nev
    Posted: Mar 22, 2009 By: mr_nev Member since: Mar 22, 2009
  2. dataferret

    dataferret UKBF Newcomer Free Member

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    Dissolution of a partnership occurs when the contractual relationship joining all of the current partners together comes to an end. In cases where one member withdraws from a partnership, the remaining partners may carry on running the business as before, but technically, a new partnership is formed.
    The circumstances for, and the consequences of, dissolution, can be specified in a partnership agreement. However, if they are not so specified, the general provisions of the Partnership Act 1890 (the 'PA') can be applied. Under the PA, a partnership is dissolved should of any of the following events occur:

    • Notice A notice of dissolution can be given by any partner to the other(s). This notice need not state any reason for the dissolution and can have immediate effect. It need not even be in writing unless the partnership agreement was by deed.
    • Expiry of fixed term A partnership will dissolve on the expiry of a pre-agreed fixed term, unless the agreement provides for the partnership to continue even after the fixed term has expired.
    • Charging Order over a partner's assets A notice of dissolution may be given by other partners to a partner whose share in the partnership assets has been charged by order of the court as security for payment of that partner's private debts.
    Posted: Mar 22, 2009 By: dataferret Member since: Sep 28, 2006
  3. dataferret

    dataferret UKBF Newcomer Free Member

    349 57
    Taken from one of the factsheets issued by Banks & Business Advice agencies:

    How to dissolve a partnership
    Most partnerships are 'at will'. This means that no particular period is agreed upon as being the time during which the partnership is to last.

    The Partnership Act 1890 governs the creation, organisation and dissolution of partnerships, if they are not dealt with specifically by a partnership agreement.

    Partnerships can be dissolved in five key ways:

    Automatic dissolution

    • Death or bankruptcy. Sometimes, a partnership will be dissolved automatically - even if some of the partners don't appreciate what is happening. Under the Partnership Act 1890, partnerships will be dissolved from the date of death or bankruptcy of any partner, unless there is something in the partnership agreement that states otherwise. In practice, most partnerships will avoid unwanted termination by drafting their partnership agreement so that the death of a partner will lead to the same outcome as retirement, while the bankruptcy of a partner will be treated as if they had been expelled, and the partnership can continue without them.
    • Technical dissolution. A technical dissolution may occur if any members of the partnership change. In such cases, the business may continue largely as before, although with a difference in the membership of the partnership.
    • Illegality. Under the Partnership Act 1890, partnerships are dissolved where an event occurs that makes it unlawful for the business to continue or for partners to carry on as a partnership. For example, if a solicitor's practising certificate lapses, partnerships with that solicitor will automatically be dissolved. However, if other solicitors in the partnership continue in business, a new partnership will automatically be formed.
    • Expiration. The aim of the Partnership Act 1890 is to dissolve partnerships formed for a fixed term or for a single undertaking once the term or task has been completed - unless otherwise agreed. However, if the partners continue in business, they will be presumed to be partners on the same terms as before except that their new partnership is a partnership at will, i.e. it can be dissolved at any time providing the right conditions are fulfilled.
    • Inference. Dissolution may be implied when, for instance, there has been a quarrel over whether notice of dissolution has been served.
    By notice

    Partnerships can be dissolved when notice is given by one or more partners to the others, unless there is a contrary provision in the partnership agreement. It could, for example, include a provision stating that the partnership can only be dissolved by 12 months' notice in writing.

    By agreement

    The partnership agreement may specify circumstances under which the agreement will be dissolved, such as a majority decision or notice from a specific partner. If there is no such agreement, all the partners must mutually agree on dissolution.


    If a partner has been induced to join the partnership by fraud or misrepresentation, they may treat the agreement as if it had been rescinded, or had never existed.

    By the courts

    The grounds for court dissolution are set out in the Partnership Act 1890 and the Mental Health Act 1983. The court may act under the 1983 Act if a judge decides that the partnership must be dissolved because one of the partners is incapable of managing their own affairs due to permanent incapacity.

    Under the Partnership Act 1890, the court may dissolve:

    • When a partner becomes permanently incapable of performing their part of the partnership contract.
    • When a partner's conduct is believed to prejudice the business, even when the prejudicial conduct has nothing to do with the partnership. A conviction for dishonesty, for example, would be likely to be regarded as prejudicial conduct in the case of many professional partnerships.
    • When a partner wilfully or persistently breaches the partnership agreement, or conducts themselves so that it is not reasonably practicable for the other partners to carry on in the business with them. A small but persistent breach of the agreement may be sufficient for the court to order dissolution as the trust between the partners will have broken down.
    • When the business can only be carried on at a loss. This provision can't be used to end temporarily loss-making partnerships. The partnership must be incapable of ever running at a profit.
    • When circumstances are such that dissolution is 'just and equitable'. Examples of circumstances that will meet these criteria include refusal to meet on matters of business, persistent quarrels between partners, or such animosity between them that reconciliation is ruled out.
    • Assaults or unjustified allegations of misconduct by another partner would justify dissolution.
    Consequences of dissolution

    • A partner or partners may be appointed to wind up the business. However, the authority of the partners can be removed by the appointment of a Receiver or a manager - a step that may be taken to ensure court supervision of the dissolution.
    • Partners must publicise the dissolution and can protect themselves from further debts by writing to those dealing with the firm (for example, customers and suppliers) or to others by advertising in the London, Edinburgh or Belfast Gazettes (
    • Partners are entitled to have the property owned by the partnership used to pay the business' debts and to have surplus assets distributed to the partners, after their own liabilities to the business have been deducted.
    • Premiums paid to enter the partnership are not normally repayable but may be if, for example, the partnership was set up for a fixed term and then dissolved early.
    • In the case of rescission, the partner rescinding remains liable for the business contracts to third parties, but is entitled to an indemnity from the guilty partner(s).
    • An account of post-dissolution transactions must be kept by the partnership. Partners who have been engaged in the dissolution are entitled to any share of the profits, in accordance with any agreed scheme and subject to contrary provision by the courts.
    The Insolvent Partnerships Order 1994 (as amended) provides a code for the winding-up of insolvent partnerships in cases of both voluntary and ordered administrations.
    Posted: Mar 22, 2009 By: dataferret Member since: Sep 28, 2006
  4. mr_nev

    mr_nev UKBF Newcomer Free Member

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    Hi, thank you so much for getting back to me. I'll have to mull over that and see what I can do, thanks.
    Posted: Mar 22, 2009 By: mr_nev Member since: Mar 22, 2009
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