The proportion of profits to which each partner shall be entitled and his or her responsibility for the losses of the partnership business can be defined in the partnership agreement. Each partner can give written undertakings in the partnership agreement to observe the rules in section 28 of the Partnership Act , as well as other undertakings, for example not to lend any partnership moneys, mortgage his or her share in the assets or sell or otherwise transfer his or her share or interest in the partnership. If there is a dispute between the partners the threat of taking action such as dissolution of the business and the consequent sale of the business assets often makes disputing partners consider a solution or settlement of the dispute. Most partnership deeds regulate rights to dissolution. If it is considered to be in the interests of the partners, the business can continue to function for some temporary period notwithstanding a dispute.
Problems often arise where the partners in a partnership are related and one partner dies.
The partnership business continues between the surviving partner or partners and the heirs of the deceased partner. As time goes by and the business continues, complicated problems can arise in relation to precisely what were the assets of the partnership and who has what rights to assets which were used in relation to the partnership business. A partner in a business should identify in his or her will the assets which are partnership assets and those which are not. Disputes are less likely to occur when the rights and duties of the partners are defined in a partnership agreement. If disputes arise between partners a solicitor who practises in the area of small business should be consulted.