Partnership Disputes

Partnership dissolution, which our team handles, is governed by the Partnership Act 1891 (Qld). Upon dissolution in Queensland is governed by the Partnership Act 1891 (Qld). Upon dissolution, the partnership assets must be applied to pay debts and liabilities, then any surplus is distributed to partners according to their entitlements. Dissolution can occur by agreement, expiry of a fixed term, notice from a partner, death or bankruptcy of a partner, or court order. The Supreme Court of Queensland may order dissolution on just and equitable grounds, including where a partner is permanently incapacitated or the business can only be carried on at a loss.

Under the Partnership Act 1891 (Qld), our team advises that a partner cannot be expelled by a majority of other partners unless an express power of expulsion is contained in the partnership agreement. Without such a clause, any partner may dissolve the partnership, but the expelled partner retains their entitlement to partnership assets and profits up to the date of dissolution. A well-drafted partnership agreement should include clear provisions for partner removal, including grounds for expulsion (such as misconduct, breach, or incapacity) and a fair valuation mechanism for the outgoing partner's interest.

Under this section of the Act, our team helps clients understand their rights. under section 24 of the Partnership Act 1891 (Qld), if there is no partnership agreement specifying profit and loss sharing, partners share equally regardless of capital contributions. However, most commercial partnership agreements provide for profit-sharing ratios based on capital contributions, time devoted to the business, or other agreed factors. Disputes often arise when the agreement is silent or ambiguous. The Supreme Court of Queensland can order an account of partnership profits, and parties should seek legal advice to determine their entitlements under the specific terms of their agreement.

Under the Limitation of Actions Act 1974 (Qld), our team advises that the limitation period for debts arising from a partnership is generally 6 years from the date the debt became due. However, because partners are jointly and severally liable for partnership debts, a creditor can pursue any individual partner for the full amount. If a partnership is dissolved, creditors must act promptly as the winding-up period can affect the availability of assets for distribution. Partners should also be aware that the limitation period for claims between partners (such as contribution claims) begins when the cause of action accrues.

No, a written partnership agreement is not legally required in Queensland. However, our team strongly recommends having one to avoid disputes. A partnership can be formed orally or in writing, but without a written agreement the Partnership Act 1891 (Qld) implies default terms that may not suit your situation.