Can You Sue a Partner in a Partnership?

One partner can sue another in a partnership and there is no technical bar to this. These are fairly common claims. There are many reasons why this might happen or might be necessary. One of the most common reasons is that a partner breaches the agreement (Partnership Agreement) regulating the relationship between the Partners and the partnership, and between each other. Breaching the partnership agreement can be extremely serious. Alternatively where there is no Partnership Agreement it might be that one Partners conduct amounts to a breach of the Partnership Act 1890. Although old law this remains good law, and implies various rights and obligations onto the conduct of partners in partnerships.

Before one partner sues another, they must ensure that all the correct elements are in place for a legitimate claim. These include:

• Understanding the basis of their claim- their cause of action;

• Assessing the extent of their loss and what they are trying to achieve;

• Assessing evidence including the presence and validity of any partnership agreement; and

• Assessing whether there has been a clear breach of either expressly agreed terms (for example in the Partnership Agreement), or implied terms (via the Partnership Act 1890)

Litigation is never a decision to be taken lightly but in many situations there is no alternative to protect the interests of a partner who is being excluded or is suffering prejudice as a result of the conduct of the other partner. A robust and well-drafted Partnership Agreement will typically make provision for contract breaches and will be especially helpful in this situation.