Q: My friend and I set up in business as a partnership, but my friend has got family problems and appears to have lost interest in the business. Consequently I am doing the majority of the work whilst he just sits back. What can I do?
A: The first question is whether you have a written partnership agreement? In the absence of any such document the standard position is that you will automatically have a ‘Partnership at Will', the terms of which will be governed by the Partnership Act 1890. As this Act is 120 years old, and has general application, the legislation is unlikely to address all the issues that your specific partnership may face. Further, the provisions which will be implied by the Act may therefore not necessarily be helpful to any of the partners, and may not reflect what was agreed in principle or what actually occurs in practice.
According to the 1890 Act, a partnership automatically comes into existence when persons are "carrying on a business in common with a view of profit". Unfortunately, a partner is not however required under the 1890 Act to do anything towards the running of the business, and therefore does not even have to turn up to work. Nevertheless, the default position is that all partners share the profits equally, irrespective of how much time or capital they put into the business.
Even worse from your perspective if you do not have a properly drafted agreement is that under the 1890 Act a partner cannot retire or be expelled. This would therefore leave you with the single option of dissolving the partnership, which would involve dividing the assets and sharing the proceeds (or liabilities) equally between you. All this demonstrates the importance of having a properly drafted partnership agreement drawn up by a Solicitor before entering into any business partnership.