Business partners shaking hands to seal an agreement, with colleagues celebrating in the background, representing the formation and potential disputes of business partnerships in Ontario and BC

Partnership Disputes: Causes, Legal Remedies and How to Protect Your Interests

Date: June 9, 2026

Business partnerships can generate value that neither partner could create alone. They can also generate disputes that neither anticipated when the relationship began. Financial disagreements, unequal contributions, broken trust, and exit conflicts are among the most common and most damaging problems in commercial relationships. When they arise, the legal framework governing the partnership determines what rights each partner has and what remedies are available.

This article explains the common causes of business partnership disputes in Ontario, the fiduciary duties partners owe each other, the legal remedies available, and how disputes are resolved. For related issues involving incorporated businesses, see our guide to shareholder disputes in Ontario.

The short answer
Partnership disputes in Ontario are governed by the Partnerships Act, 1990 and the partnership agreement. Partners owe each other fiduciary duties of loyalty and good faith. Where these duties are breached, or the partnership agreement is not followed, legal remedies including damages, buyouts, injunctions, and dissolution are available.

The absence of a written partnership agreement makes disputes significantly harder to resolve because the parties fall back on the statutory defaults and contested oral evidence. If you are in a partnership without a written agreement, addressing that now is the most cost-effective step available.

Common causes of partnership disputes

Most partnership disputes have identifiable roots that, if recognized early, could have been addressed before they escalated into litigation. Understanding the common patterns helps both in prevention and in assessing the strength of a legal position when a dispute has already developed.

Breach of fiduciary duty Partners owe each other duties of loyalty and good faith under both the Partnerships Act and general law. Misusing company resources, diverting business opportunities, competing with the partnership without consent, or withholding material information are all forms of fiduciary breach that give rise to legal claims.
Unequal contributions and compensation Disputes over who is contributing more, whether financially or through labour, are extremely common in closely held partnerships. Without a written agreement defining each partner's obligations and how compensation is calculated, resentment builds and eventually produces a dispute that is difficult to resolve without evidence of what was actually agreed.
Unilateral decision-making Under Ontario's Partnerships Act and BC's Partnership Act, partners have equal rights in the management of the business unless otherwise agreed. A partner who makes significant decisions without consulting the others, takes on debt, signs contracts, or commits the partnership without authority is acting outside their legal rights and may be personally liable for resulting losses.
Breach of partnership agreement The partnership agreement is a contract. Failure to follow its terms, whether regarding profit sharing, decision-making procedures, non-competition obligations, or exit provisions, is a breach of contract giving rise to claims for damages and specific performance.
Exit and buyout conflicts When a partner wants to leave and the partnership agreement does not clearly define exit terms, valuation methodology, or buyout procedures, disputes about the price and process of exit are almost inevitable. See our related guide on what to do when your partner is making decisions without you for how exclusion typically precedes exit disputes.
Competing business interests A partner who starts a competing business, solicits the partnership's clients, or uses partnership resources for personal ventures while still a partner is in breach of their fiduciary duties. These situations often require urgent legal intervention to prevent ongoing damage. See our detailed guide on what to do when your partner starts a competing business.

The fiduciary duties partners owe each other

The fiduciary duties between business partners are among the most significant obligations in commercial law. They exist independently of any written agreement and cannot be contracted out of entirely. Under Ontario's Partnerships Act, 1990, BC's Partnership Act, and the common law of fiduciary relationships, each partner owes the others duties that include:

  • Rendering true accounts and full information of all things affecting the partnership to any partner
  • Accounting to the firm for any benefit derived from conducting the partnership business or from using partnership property, name, or business connections
  • Not competing with the partnership without the consent of the other partners
  • Acting in good faith and in the best interests of the partnership rather than their own personal interests
  • Not making secret profits at the partnership's expense

These duties continue for as long as the partnership exists and, in respect of information obtained during the partnership, may continue after it ends. A departing partner who takes confidential client information, uses partnership trade secrets, or solicits clients they developed through the partnership may be in breach of duties that survive the dissolution of the relationship.

The fiduciary duties between business partners are stricter than those between ordinary contracting parties. A business partner cannot simply act in their own interest and justify it as a commercial decision. Courts apply a high standard of good faith and loyalty and will award remedies including disgorgement of profits, damages, and injunctions where those duties are breached.

Legal remedies for partnership disputes

The appropriate remedy depends on the nature of the dispute, the terms of the partnership agreement, and what outcome is realistically achievable. The following are the main legal remedies available in Ontario and BC partnership disputes.

Negotiation and mediation

Most partnership disputes settle before reaching trial. A well-structured negotiation, facilitated by lawyers who understand the legal positions of each side, frequently produces a faster and more cost-effective resolution than litigation. Where the primary dispute is over valuation, a jointly appointed valuator can sometimes resolve the core financial issue without court involvement.

Breach of fiduciary duty claims

Where a partner has acted in bad faith, diverted business opportunities, misused partnership assets, or competed with the partnership without consent, a breach of fiduciary duty claim can produce damages, disgorgement of profits made at the partnership's expense, and injunctive relief to stop ongoing harm. These claims require careful evidence of the duty, the breach, and the resulting loss.

Enforcement of the partnership agreement

Where the dispute involves a failure to follow the written partnership agreement, breach of contract claims are available. Courts can order specific performance of the agreement's terms, award damages for losses caused by the breach, and grant declaratory relief about the parties' respective rights and obligations under the agreement.

Buyout

Where one partner wants to exit and the other refuses to buy on fair terms, or where the partnership agreement contains buyout provisions that are not being followed, courts can order a buyout at fair value. The valuation methodology and the question of whether a minority discount applies depend on the agreement and the circumstances of the dispute.

Injunctive relief

Where a partner is actively competing, diverting clients, or dissipating partnership assets, an injunction can stop the harmful conduct immediately while the broader dispute is resolved. Injunctions are available urgently where irreparable harm is occurring and the legal basis for relief is clear.

Dissolution

Where the partnership relationship has irretrievably broken down, courts in Ontario can order dissolution under the Partnerships Act, 1990, and BC courts have equivalent powers under the Partnership Act. Grounds include permanent incapacity of a partner, conduct prejudicial to the business, wilful or persistent breach of the partnership agreement, and circumstances making it just and equitable that the partnership be dissolved. On dissolution, assets are realized and distributed according to the agreement and the Act.

Your partner is making decisions without you, diverting clients, or refusing to account for partnership funds?

These situations escalate quickly and delay makes them harder to remedy. The longer unauthorized conduct continues, the more damage accumulates. Get advice on your options before the situation deteriorates further.

Call: 1-800-771-7882 Find Out Where You Stand

What happens without a written partnership agreement

Without a written partnership agreement, the partnership is governed entirely by the default rules in Ontario's Partnerships Act, 1990 or BC's Partnership Act. Those defaults assume equal sharing of profits and losses, equal rights in management, and unanimous consent for fundamental changes to the nature of the business.

These defaults rarely reflect what the partners actually intended. The partner who contributed more capital may have expected a larger profit share. The partner who does more work may have expected management authority. The partner who brought in the clients may have expected specific protections on exit. None of these expectations are enforceable without a written agreement, and disputes about what was actually agreed orally are expensive, uncertain, and almost always contested.

If your partnership is operating without a written agreement, the most important step you can take right now is to have one drafted before a dispute arises. See our detailed guide on shareholder and partnership agreements for what a well-drafted agreement should cover.

Partnership disputes in British Columbia

BC partnerships are governed by the Partnership Act, RSBC 1996, c. 348 rather than Ontario's Partnerships Act. The principles are substantially similar: partners have equal rights in management unless otherwise agreed, partners owe each other fiduciary duties of good faith and loyalty, and courts have equivalent powers to order dissolution, account for profits, and award damages for breach of fiduciary duty.

BC courts apply the same general approach to partnership disputes as Ontario courts and the same fiduciary duty principles developed in Canadian common law. The primary practical differences are procedural: BC claims proceed in the BC Supreme Court under BC's procedural rules, and BC's Limitation Act governs the applicable limitation periods.

Dealing with a partnership dispute and not sure what your rights are?

Whether you are the partner being excluded or the one trying to exit, understanding your legal position before taking action determines your options. Achkar Law advises on business partnership disputes across Ontario and BC.

Get Advice on Your Partnership Dispute Or call us: 1-800-771-7882

Practical takeaways

Partners owe each other fiduciary duties of loyalty and good faith that exist independently of any written agreement. Breaching these duties gives rise to claims for damages and disgorgement of profits regardless of what the partnership agreement says.
Without a written partnership agreement, the Partnerships Act, 1990 governs. The defaults assume equal sharing and equal management rights, which rarely reflect what the partners actually intended.
A partner cannot be unilaterally expelled without legal authority in the partnership agreement. Attempting to force a partner out without proper legal basis gives rise to claims for breach of the partnership agreement and breach of fiduciary duty.
Courts can order dissolution of a partnership on just and equitable grounds where the relationship has irretrievably broken down, even where the partnership agreement does not provide for it.
Fiduciary duties continue after the partnership ends in respect of information and opportunities obtained during the relationship. A departing partner who takes confidential information or solicits clients may remain liable.
Limitation periods apply to partnership dispute claims. The two-year basic period runs from discovery in both Ontario and BC. If you suspect breach of fiduciary duty or other misconduct, seek legal advice immediately.

Frequently asked questions

What is a partnership dispute?

A partnership dispute arises when business partners disagree over key aspects of their relationship, including financial contributions, decision-making, profit distribution, allegations of misconduct, or exit terms. Partnership disputes typically involve legal obligations: partners owe each other fiduciary duties and are bound by the partnership agreement and the default rules under Ontario's Partnerships Act, 1990 or BC's Partnership Act.

What fiduciary duties do business partners owe each other in Ontario?

Partners owe each other duties of loyalty, good faith, and utmost fair dealing under the Partnerships Act, 1990 and common law. Each partner must act in the best interests of the partnership, account for all benefits received in connection with the partnership's business, not compete with the partnership without consent, disclose material information, and not divert business opportunities that belong to the partnership.

Can a business partner be forced out of a partnership in Ontario?

Not without legal authority. A partner cannot be unilaterally removed without their consent unless the partnership agreement contains an expulsion clause and its conditions are met. Attempting to force a partner out without proper legal basis gives rise to claims for breach of the partnership agreement and breach of fiduciary duty. Courts will not allow a partner to be stripped of their rights without proper legal justification.

What happens when there is no partnership agreement?

Without a written agreement, the partnership is governed by Ontario's Partnerships Act, 1990 or BC's Partnership Act. The defaults assume equal sharing of profits and losses and equal management rights. These defaults rarely reflect what the partners actually intended, making disputes significantly harder and more expensive to resolve because the parties must rely on contested oral evidence of what was agreed.

How is a partnership dissolved in Ontario?

A partnership can be dissolved by agreement of all partners, by expiry of a fixed term, by court order, or on just and equitable grounds under the Partnerships Act, 1990. Grounds for court-ordered dissolution include permanent incapacity of a partner, conduct prejudicial to the business, persistent breach of the agreement, and circumstances making it just and equitable that the partnership end. On dissolution, assets are realized and distributed according to the agreement and the Act.

What is the difference between a partnership dispute and a shareholder dispute?

A partnership dispute involves partners in an unincorporated partnership governed by Ontario's Partnerships Act. A shareholder dispute involves shareholders in a corporation governed by the Ontario Business Corporations Act or Canada Business Corporations Act. The legal framework and available remedies differ significantly: incorporated businesses have access to the oppression remedy, while partnerships rely on fiduciary duty claims and dissolution under the Partnerships Act.

Involved in a partnership dispute in Ontario or BC? Tell us what's happening.

Partnership disputes move quickly and the decisions made in the early stages determine the range of options available. Whether you are being excluded from the business, discovering financial misconduct, or trying to exit on fair terms, Achkar Law advises on business partnership disputes across Ontario and British Columbia. We will assess your position honestly and advise on the steps that protect your interests before the situation deteriorates further.

Call us at 1-800-771-7882 or fill out the form below and we will be in touch.