What happens when one partner wants to leave a partnership, but the other does not?

16 March 2026

Business partnerships are like any relationship and disagreements can arise at any point.

Sometimes one partner may decide that they want to leave the business to pursue a new venture, while the other wishes to continue or at other times a dispute may lead to the breakdown of a partnership.

Whatever the reason, this can create a complicated situation, especially if there is no clear partnership agreement in place.

It is important you understand how to approach it and reduce the risk of any further disputes from occurring.

What is a partnership?

A partnership is a business arrangement when two or more individuals run a business together with the intention of making a profit.

There are generally two types of partnerships:

• Standard partnership – Where partners share responsibility for managing the business and are personally liable for debts.
• Limited Liability Partnerships (LLPs) – These are separate legal entities and offer partners some protection from personal liability.

What is a partnership agreement?

A partnership agreement is a legal document that outlines how a partnership will operate.

It often clarifies:

• The roles and responsibilities of each partner
• How profits and losses are shared
• How decisions are made within the business
• What happens if a partner wants to leave or retire
• How disputes between partners will be handled

Having this agreement in place can provide clear guidance on how the partnership should be managed and how an exit or dissolution should be handled.

Without one, the partnership will usually be governed by the Partnership Act 1890 and this sets out default rules that may not reflect your wishes.

Can a partnership continue if one partner leaves?

When one partner decides to leave a partnership, the existing partnership must be formally dissolved. This is regardless of if the other partners wish to continue the business.

However, this does not necessarily mean that the business must permanently close.

Instead, the original partnership is dissolved and the remaining partners may form a new partnership or continue trading under a different structure.

This situation is often referred to as a technical dissolution, where the departing partner receives their share of the business while the remaining partner or partners continue trading.

How do you dissolve a partnership?

The process for dissolving a partnership will usually depend on whether a partnership agreement exists.

A partner who wishes to leave should provide a written notice of dissolution to the other partner or partners.

Once a dissolution is established, the business must go through a process known as winding up.

This involves:

• Settling outstanding debts
• Collecting money owed to the business
• Valuing and distributing business assets
• Preparing final accounts
• Dividing any remaining liabilities and profits

How do you dissolve a partnership without an agreement?

If there is no partnership agreement, the partnership is usually treated as a partnership at will.

Under the Partnership Act 1890, any partner can dissolve the partnership by giving notice to others. They do not need to provide a reason and the dissolution can take effect immediately.

The Act also states that, unless otherwise agreed:

• Profits are shared equally between partners
• Losses and liabilities are shared equally

These default rules can sometimes lead to disputes, particularly if partners contributed different amounts of money or effort to the business.

How do you handle a dispute between partners?

When one partner wants to leave but the other does not, disagreements can arise over:

• The value of the business
• How assets should be divided
• Who is responsible for outstanding debts
• Whether the remaining partner(s) can continue trading

If a partnership agreement exists, it may contain a dispute resolution process, which partners must follow before taking legal action.

Disputes can often be resolved through mediation or negotiation, allowing partners to reach a mutually acceptable solution without going to court.

However, if partners cannot come to an agreement, then it may be necessary to apply to the court for a dissolution order.

Courts may order dissolution if there has been misconduct, the partnership is operating at a loss or if it is considered just and equitable for the partnership to end.

How can we support you partner dispute?

Partnership disputes can be stressful and potentially damaging to the business and those involved.

Our expert team can advise you on the most effective dispute resolution process for your partnership.

We can also work in conjunction with mediators to help you reach a fair agreement efficiently.

With early legal advice, you can reduce the risk of disagreements escalating and avoid costly and time-consuming court proceedings.

For further support or advice on partner disputes, get in touch today.