A conflict between partners occurs more often than entrepreneurs initially expect. A VOF (general partnership) is based on collaboration, trust, and shared responsibility. When that trust disappears and conflicts persist, the business can reach a deadlock. Many entrepreneurs then wonder: what can I do when the partnership with my partner no longer works?
In this article, you will learn where conflicts between partners arise, what practical solutions are available, and when legal action becomes necessary.
When does a conflict between partners arise?
A conflict between partners rarely occurs overnight. Usually, it involves an accumulation of problems, such as:
- agreements that are structurally not honored;
- unequal effort or involvement;
- differences of opinion about the direction of the business;
- financial ambiguity or distrust;
- personal tensions that affect business operations.
As long as conflicts are not discussed or resolved, the chance of escalation increases.
Why conflicts within a VOF are particularly sensitive
In a VOF, partners are personally liable for the debts of the business. A conflict between partners therefore affects not only the partnership, but also the personal assets of the entrepreneurs involved.
This is precisely why it is important to address a conflict promptly and carefully.
What do the agreements and the partnership contract say?
In a conflict between partners, the first step is always to consult the partnership agreement (cooperation contract).
This often contains provisions regarding:
- division of tasks and authority;
- decision-making;
- profit and cost sharing;
- withdrawal or termination;
- dispute resolution.
Are clear agreements lacking? Then there is often room for discussion and legal proceedings.
Practical solutions for a conflict between partners
1. Initiate a conversation
At an early stage, an open conversation can prevent significant damage. This requires both parties to be willing to prioritize the business interest.
2. Revise and formalize agreements
When the partnership can still be saved, revising and re-formalizing agreements can help reduce conflicts.
3. Separate tasks and responsibilities
In some cases, a different division of tasks or a clearer authority structure can reduce tensions.
4. Withdrawal of one partner
If continued partnership is no longer feasible, withdrawal of one partner may be a solution. This must be arranged with legal care to limit liability risks.
5. Termination of the VOF
When the conflict has become irresolvable, terminating the VOF may be the only realistic option. This means the business is wound up and assets are divided.
6. Legal action
If negotiation offers no solution, legal action may be necessary to enforce rights or break a deadlock.
What if your partner fails to honor agreements?
When a partner structurally fails to honor agreements, this may constitute a breach of contract. This can be grounds for withdrawal, termination of the partnership, or a damages claim.
It is important to document this properly and not to wait too long.
Consequences of an escalating conflict
A prolonged conflict between partners can have serious consequences:
- stagnation of decision-making;
- loss of clients and revenue;
- increase in debts;
- personal liability risks;
- prolonged legal proceedings.
International aspects
In international partnerships or with foreign partners, a conflict can become extra complex. Questions about applicable law and competent court then come into play.
General information about collaborating as an entrepreneur can be found at the Chamber of Commerce.
Common mistakes in conflicts between partners
- waiting too long to intervene;
- not formalizing clear agreements;
- letting emotions take over;
- underestimating personal liability;
- litigating without a strategy.
What can Arslan Advocaten do for you?
Arslan Advocaten assists entrepreneurs with a conflict between partners. We analyze your position, advise on possible solutions, and guide negotiations or legal proceedings.
Read more about our expertise in business law, about terminating a VOF, and about withdrawing from a VOF.
Costs and litigation funding in VOF disputes
In disputes concerning a conflict between partners, we do not, in principle, work on a no cure no pay basis. Such cases require a careful legal and strategic approach.
However, this does not mean you have to bear these costs yourself. In many VOF disputes, litigation funding is available.
We work together with an independent litigation funder who — after a substantive assessment — may decide to pay all litigation costs, including:
- attorney fees;
- court fees;
- expert costs;
- costs on appeal.
If litigation funding is granted, you as a client pay nothing on balance. The litigation funder bears the full financial risk.
The litigation funder only receives compensation upon success. For you, this means that litigation is possible without financial risk.
About the author
This article was written by Onur Arslan, attorney and founder of Arslan Advocaten. He specializes in business disputes, including conflicts within VOF structures.
Would you like to discuss how your conflict with your partner can be resolved?