I went into a partnership with a person four months ago. It all went sour when she kept asking for more and more money to buy stock and I could never get her to prove where the money had gone. In the end I decided there would be no more money and I suggested that we brought in a third partner or sell the business. She said that she did not want another partner and that selling the business was not an option. What can I do? I want out now!

This is an obviously a very difficult situation. You don't want to hear this, but it demonstrates why you should always have a partnership/shareholder agreement when going into business with someone, even with a good friend.

In the absence of an agreement between the partners, a partnership is dissolved:

• If entered into for a specific undertaking, by the achievement or termination of that undertaking.
• If entered into for a fixed-term, at the end of that term.
• If entered into for an undefined time (as your example seems to be), by any partner giving notice to the other partner(s).

It is also dissolved:

• By the death of a partner.
• By the bankruptcy of a partner, or;
• If it becomes unlawful.

Alternatively, you can apply to the court to have a partnership dissolved on a number of grounds.

If the main asset of the partnership is the business, then the business should be offered for sale as a going concern as part of the dissolution of the partnership. It may be that your partner is the only logical buyer of the business, which can make it awkward to obtain a valuation. However, if she is not prepared to pay for the business, then it should be closed down as part of the dissolution.

If you cannot reach agreement between yourselves, you may have to resort to legal action to achieve this.

James Omond runs his own Melbourne-based commercial legal practice Omond & Co, specialising in the area of intellectual property (trademarks, copyright, etc). He is a registered trademarks attorney, and was the Australian Young Corporate Lawyer of the Year (back in 1999, when he was almost young). James also advises on a broad range of commercial matters, such as buying and selling businesses, partnerships and joint ventures, trade practices, advertising, marketing and promotion.