Business Partnership Dispute Lawyers

A business partnership dispute can threaten not just the relationship between partners but the business itself. When trust breaks down, when a partner is not pulling their weight, or when someone is taking more than they are entitled to, the decisions you make in the first days matter enormously. Our business partnership dispute lawyers represent partners and businesses in Ontario and British Columbia at every stage of these conflicts.

Partnership Agreements: The Starting Point for Every Dispute

Most business partnership disputes begin with the same question: what did the partners actually agree to? A well-drafted partnership agreement sets out how decisions are made, how profits and losses are allocated, what happens when a partner wants to leave, and how disputes are to be resolved. When that agreement is clear and enforceable, it provides the roadmap for resolving most conflicts.

The problem is that many partnerships operate without a written agreement at all, or with one that was drafted years ago and no longer reflects how the business actually runs. When partners fall out, the absence of a clear partnership agreement means the dispute is governed by default rules under the Partnership Act in Ontario or BC, which may produce outcomes that neither partner anticipated or intended.

Contracting through a partnership also raises its own questions. When one partner enters into a contract on behalf of the partnership, that agreement can bind all of the partners. Understanding the scope of each partner's authority to bind the partnership, and what happens when a partner acts outside that authority, is a core issue in many business partnership disputes.

Whether you have a detailed partnership agreement or none at all, our lawyers can assess your position and advise on how to proceed.

Common Business Partnership Disputes

Partnership disputes take many forms. The following are the situations we handle most frequently.

A Business Partner Stealing From the Company

One of the most serious and unfortunately common disputes involves a partner who has been taking money, diverting business opportunities, or misappropriating assets for their own benefit. A partner stealing from the company is not just a breach of the partnership agreement: it is a breach of fiduciary duty, it can amount to corporate or commercial fraud, and in some cases it may give rise to criminal liability.

If you suspect a partner is stealing from the business, the first step is to secure the financial records and get legal advice before confronting the partner directly. Evidence can disappear quickly, and how you handle the situation in the first days can significantly affect what remedies are available. Courts can grant urgent orders freezing assets, compelling the production of accounts, and appointing a receiver to take control of the business while the dispute is resolved.

Disputes Over Profit Sharing and Distributions

Disagreements about how profits are allocated, when distributions are made, and whether one partner is drawing more than their entitlement are among the most common sources of partnership conflict. The answer depends on what the partnership agreement says, and where it is silent, on the default rules under the applicable Partnership Act. Where one partner has consistently drawn more than their share, an accounting of the partnership's finances and a claim for equitable compensation may be available.

Disputes Over Management and Decision-Making

When partners cannot agree on how the business should be run, who has authority to make decisions, or what direction the business should take, the dispute can paralyze the organization. In the absence of a clear decision-making structure in the partnership agreement, the default position is that most ordinary decisions require a majority of partners, while changes to the fundamental nature of the business require unanimity. Where deadlock is preventing the business from functioning, court intervention may be required.

A Partner Wants to Leave

A partner who wants to exit the business, or who is being pushed out, raises questions about valuation, buyout terms, the treatment of ongoing obligations, and whether restrictive covenants apply after departure. If the partnership agreement addresses these questions, it provides the framework. Where it does not, the parties must either negotiate terms or have them determined by a court or arbitrator. We advise both departing partners and those remaining on how to handle a partner exit in a way that protects their interests.

Breach of Partnership Agreement

Where one partner has failed to perform their obligations, competed with the partnership, or acted in a way that is inconsistent with their duties to the other partners, a breach of contract claim may arise alongside claims for breach of fiduciary duty and other causes of action. The available remedies depend on the nature and extent of the breach and the losses that resulted.

Partnership Dissolution Disputes

Dissolving a partnership, whether voluntarily or through court order, involves winding up the partnership's affairs, settling its debts, and distributing the remaining assets among the partners. Where the partners cannot agree on how that process should be managed, or where one partner is obstructing the winding-up, court intervention may be required. In serious cases, the court may appoint a receiver to manage the dissolution process.

Partnership disputes tend to escalate quickly. The sooner you understand your legal position, the more options you have. Call us for a direct assessment.

Fiduciary Duties Between Business Partners

Partners in a business partnership owe each other fiduciary duties. That means each partner is required to act in good faith and in the best interests of the partnership, not in their own self-interest at the expense of their partners. Those duties include the duty of loyalty, the duty to avoid conflicts of interest, the duty to account for profits derived from partnership business, and the duty not to compete with the partnership without consent.

These obligations arise independently of what the partnership agreement says. A partner who diverts a business opportunity to a company they control, who takes a secret commission in connection with partnership business, or who sets up a competing business while still a partner, has likely breached their fiduciary duties regardless of whether the agreement explicitly prohibits that conduct.

The remedies for breach of fiduciary duty are among the most powerful in civil law. A court can require the breaching partner to account for all profits made from the breach, impose a constructive trust over assets acquired through the wrongdoing, and award equitable compensation for losses suffered by the partnership and the other partners. For more detail on these duties and the remedies available for their breach, see our breach of fiduciary duty page.

Remedies in Business Partnership Disputes

Urgent Injunctions and Asset Preservation

Where a partner is misappropriating assets, destroying records, or taking steps that could cause irreversible harm to the business or the other partners, an urgent injunction may be available to stop that conduct immediately. A Mareva injunction can freeze a partner's assets pending the resolution of the dispute. Courts can also appoint a receiver to take control of the business where the partners are unable to manage it cooperatively. Speed is critical in these situations.

Account of Profits

Where a partner has profited from a breach of fiduciary duty, the court can order them to account for those profits and pay them over to the partnership or the other partners. This remedy applies regardless of whether the partnership suffered an equivalent financial loss, which makes it particularly powerful where a partner has been secretly benefiting from their position.

Damages and Equitable Compensation

Where the partnership or the other partners have suffered a provable financial loss as a result of a partner's wrongful conduct, damages or equitable compensation may be awarded. The measure depends on the nature of the claim and whether it is framed in contract, tort, or equity.

Dissolution and Winding Up

In some cases, the breakdown of the partnership relationship is so complete that the only practical remedy is dissolution. A court can order the dissolution of a partnership and the winding up of its affairs where it is just and equitable to do so. The court has broad discretion in how it structures the dissolution to protect the interests of all partners and the partnership's creditors.

Buyout Orders

As an alternative to dissolution, a court may order one partner to buy out the other at a fair value determined by the court or by an independent valuator. This outcome allows the business to continue operating while resolving the dispute between the partners, which is often preferable to a forced wind-up that destroys value for everyone.

The right remedy depends on the facts and how quickly you act. Our business partnership dispute lawyers can assess your situation and advise on the most effective path forward.

Business Partnership Disputes in Ontario and British Columbia

Partnership law in Canada is provincial. The rules that govern partnerships, the default obligations between partners, and the procedures for resolving disputes differ between Ontario and BC in ways that affect how a dispute is best handled.

Ontario

In Ontario, partnerships are governed by the Partnerships Act, which sets out the default rules on profit sharing, decision-making, fiduciary duties, and dissolution where the partnership agreement is silent. Business partnership disputes are heard in the Superior Court of Justice. Urgent applications for injunctions, receivership orders, and other relief can be heard on short notice where the circumstances require it. Mandatory mediation applies to most civil proceedings in Toronto, Ottawa, and Windsor.

British Columbia

In BC, partnerships are governed by the Partnership Act. The default rules differ from Ontario's in some respects, and the procedural framework for resolving disputes in the BC Supreme Court has its own requirements. BC also has a separate regime for limited partnerships that affects how certain partnership disputes are analyzed. We practice in both provinces and can advise on how the law in each jurisdiction applies to your situation.

Business Partnership Disputes: Frequently Asked Questions

What is a partnership agreement and do I need one?

A partnership agreement, sometimes called a partnership agreement contract, is a written agreement between the partners that sets out the terms of the partnership: how profits and losses are allocated, how decisions are made, what each partner's obligations are, what happens when a partner wants to leave, and how disputes are resolved. You do not legally need one to have a partnership, but operating without one leaves your rights governed entirely by the default rules of the applicable Partnership Act, which may not reflect what you actually agreed to with your partners. Most partnership disputes are significantly harder and more expensive to resolve when there is no written agreement.

What can I do if my business partner is stealing from the company?

Act quickly and get legal advice before doing anything else. If a business partner is stealing from the company, you may be entitled to urgent court orders freezing assets, compelling the production of financial records, and appointing a receiver to take control of the business. The evidence you secure in the first days matters significantly. Do not confront the partner directly or give them an opportunity to move or destroy assets before you have taken appropriate legal steps.

Can one partner bind the entire partnership to a contract?

Generally, yes. In most partnerships, each partner has the authority to enter into contracts on behalf of the partnership in the ordinary course of business, and those contracts bind all partners. The scope of that authority can be limited by the partnership agreement or by notice to third parties. Where a partner has exceeded their authority, the partnership may have a claim against that partner, but the third party who contracted in good faith may still be able to enforce the agreement against the partnership.

My partner wants to dissolve the partnership but I do not. What are my options?

It depends on what the partnership agreement says. If the agreement addresses dissolution, those provisions govern. If it does not, the default rules under the Partnership Act apply. In some cases, a partner can dissolve a partnership by giving notice. In others, dissolution requires agreement or a court order. You may also have the option of seeking a buyout of the departing partner's interest rather than a full dissolution. We can review your partnership agreement and advise on your options.

What is the difference between a partnership and a corporation for dispute purposes?

In a corporation, shareholders have statutory rights and remedies available under corporate legislation, including oppression remedies and derivative actions. In a partnership, the rights between partners are governed primarily by the partnership agreement and the applicable Partnership Act. The remedies and the procedures for pursuing them differ significantly. If your business is incorporated, shareholder dispute remedies may be available to you instead of, or in addition to, partnership law claims.

How long does it take to resolve a business partnership dispute?

It depends on the complexity of the dispute, whether the parties are able to negotiate a resolution, and whether court proceedings are required. Some partnership disputes resolve through negotiation or mediation within months. Others, particularly those involving allegations of misappropriation, complex financial accounting, or contested dissolution and valuation issues, can take significantly longer if they proceed to trial. Urgent injunctive relief can be obtained much more quickly where the circumstances warrant it.

Do you handle partnership disputes for both partners in a two-person partnership?

We can only act for one side in any given dispute. We act for the partner who retains us first and advise them on their rights and options throughout the proceeding. If you are in a dispute with your business partner and you are the first to call, we will assess your position and advise you on how to proceed.

Speak With a Business Partnership Dispute Lawyer

Tell us about your situation. We will follow up promptly to discuss your options. You can also reach us directly at 1-800-771-7882.