Business Partnership Disputes in Queensland: Your Legal Rights and Options

A business partnership dispute in Queensland can threaten everything you have built together, and the moment a partner starts acting against your interests, you need to understand your legal rights immediately. Whether your partner has withdrawn funds without authority, started a competing business, or simply refused to honour the profit sharing arrangement you agreed on, Queensland law provides real remedies. This guide explains what those remedies are, how the Partnership Act 1891 (Qld) protects you, and when you need a commercial litigation lawyer in Brisbane to act fast.

What Is a Business Partnership Under Queensland Law?

Under the Partnership Act 1891 (Qld), a partnership is defined as the relation which subsists between persons carrying on a business in common with a view to profit. That definition is broader than most business owners expect.

You do not need a written agreement, a registered business name, or even a formal handshake. If two or more people are running a business together and sharing profits, the law may well treat them as partners regardless of what they call themselves. Informal partnerships arise automatically from conduct, and that has significant consequences for personal liability.

General partnerships are the most common form in Queensland. Each partner carries unlimited personal liability for the debts and obligations of the firm. If the business owes money, creditors can pursue your personal assets.

Limited partnerships exist under the Partnership Act too, but they require at least one general partner with unlimited liability and must be registered. They are far less common in practice.

Partnerships are legally and structurally different from companies and trusts. A company is a separate legal entity under the Corporations Act 2001 (Cth), the company itself owns assets and carries liabilities. A partnership has no separate legal personality. The partners are the business. That distinction matters enormously when a dispute arises because your exposure is personal and immediate, not buffered by corporate structure.

A written partnership agreement can override many of the Act’s default provisions. Where no agreement exists, or where the agreement is silent on a point, the Act fills the gap with default rules that may not reflect what the partners actually intended.

The 6 Most Common Partnership Disputes in Queensland

Partnership disputes rarely arise from a single event. More often, tensions build over time before a trigger causes open conflict. The table below outlines the six dispute types we see most frequently in Queensland commercial litigation.

Dispute Type	What It Looks Like in Practice
Profit distribution disagreements	Partner A claims entitlement to a larger share based on workload; Partner B insists on the written split. Where the agreement is silent, s 24(1) of the Act provides for equal sharing of profits regardless of capital contributed.
Capital or labour contribution disputes	One partner contributes significantly more capital or sweat equity and seeks recognition; the other disputes what was agreed at the outset.
Breach of fiduciary duty (s 28)	A partner secretly diverts business opportunities to themselves, fails to disclose conflicts of interest, or misappropriates partnership funds. Section 28 requires partners to render true accounts and full information, courts treat this as a duty of the utmost good faith.
Unauthorised decisions binding the firm (s 20 agency)	One partner signs a contract, takes on debt, or makes a major business decision without the others’ consent. Under s 20, every partner is an agent of the firm, so the firm, and every partner personally, may be bound.
Partnership dissolution disputes	A partner purports to dissolve the partnership by notice under s 32, or seeks a court order under s 35. Disputes arise over whether the dissolution was valid, on what date it took effect, and how assets should be divided under s 44.
Competing business or misuse of property	A partner starts or joins a competing business using the firm’s client relationships, trade secrets, or goodwill. This can constitute both a breach of fiduciary duty and, depending on the agreement, a breach of express restraint provisions.

What Does Your Partnership Agreement Say?

The single most important document in any partnership dispute is the partnership agreement, if one exists. A well drafted written agreement can override most of the Act’s default provisions and give the partners certainty on the issues that most commonly cause conflict.

Where no written agreement exists, or where the agreement does not address a particular point, the Partnership Act 1891 (Qld) applies its default rules. Those defaults include equal sharing of profits under s 24(1), regardless of the actual work done by each partner. That default surprises many business owners and is frequently the source of a dispute.

Five Clauses Every Queensland Partnership Agreement Should Include

1. Profit and loss sharing ratio, Specify the exact ratio. Do not leave it to inference from capital contributions or oral agreement.
2. Decision-making authority and voting, Define what decisions require unanimous consent versus a majority, and what happens when partners deadlock.
3. Dissolution procedure and buyout mechanism, If a partner wants to exit, the agreement should specify the process, the valuation methodology for their share, and the timeline.
4. Restraint of trade on exit, A properly drafted restraint clause (reasonable in scope, area, and duration) protects the remaining partners from a departing partner immediately competing for the same clients.
5. Dispute resolution clause, Require mediation before litigation. This reduces costs and preserves relationships where possible.

If your agreement does not contain these clauses, or if you have no written agreement at all, you are exposed to the Act’s defaults, which may not reflect what you actually agreed with your partner. Getting legal advice before a dispute arises is far cheaper than litigating one.

Note also that the agreement cannot override all of the Act’s provisions. Some protections for partners (and third parties) are non-negotiable under the legislation.

Dissolution, Voluntary and Court-Ordered

When a partnership breaks down, the question quickly becomes: how do we end this, and who gets what?

Voluntary Dissolution by Notice (s 32)

If your partnership is a “partnership at will”, meaning it has no fixed term, any partner can dissolve it by giving notice to all the other partners. The dissolution takes effect from the date of the notice (or a later date specified in it). No court involvement is required. This can happen fast, and a partner acting in bad faith may use a dissolution notice as a tactical weapon.

Court-Ordered Dissolution (s 35)

Where the partnership is for a fixed term, or where notice alone is not appropriate, a partner can apply to the Supreme Court of Queensland for a dissolution order. The grounds under s 35 include:

• A partner has become permanently incapable of performing their duties;
• A partner has been guilty of conduct calculated to prejudicially affect the carrying on of the business;
• A partner wilfully or persistently breaches the partnership agreement;
• The business can only be carried on at a loss; or
• It is just and equitable to dissolve the partnership.

The “just and equitable” ground is broad and has been used in circumstances including irretrievable breakdown of trust between partners, oppressive conduct, and deadlock where the partnership agreement provides no resolution mechanism.

Distribution of Assets on Dissolution (s 44)

Section 44 sets out the order in which partnership property is applied on dissolution:

1. Liabilities to third party creditors;
2. Advances made by partners beyond agreed capital;
3. Return of capital contributions; and
4. Any remaining surplus shared equally (unless the agreement provides otherwise).

Goodwill is often one of the most disputed assets on dissolution. A professional practice (medical, legal, accounting) may have significant goodwill that partners value very differently. Valuation disputes frequently require expert evidence.

Limitation Periods

Claims arising from the partnership relationship, including claims for breach of the partnership agreement, are generally subject to the six-year limitation period under s 10 of the Limitation of Actions Act 1974 (Qld). Some equitable claims (such as claims for breach of fiduciary duty) may have different limitation rules, but you should not assume you have time to spare. Delay can result in the loss of evidence, documents, and ultimately your legal rights.

Remedies Available to Partners in a Dispute

Queensland law offers a range of remedies depending on the nature of the dispute and the conduct of the other partner. A commercial litigation lawyer in Brisbane can advise which remedies are available on the facts of your case.

Account of Profits

Where a partner has secretly profited at the expense of the partnership, by diverting clients, taking secret commissions, or exploiting a business opportunity that belonged to the firm, you can seek an account of profits. This remedy requires the errant partner to account for (and hand over) the profits they made from the wrongdoing, regardless of whether the partnership has suffered a quantifiable loss.

Injunction to Restrain Breach

Where a partner is actively breaching their obligations, diverting business, destroying records, or removing partnership assets, an urgent injunction from the Supreme Court of Queensland can restrain that conduct immediately. Injunctive relief is time critical. The longer you wait, the harder it becomes to establish the urgency required.

Winding Up of the Partnership

The court can order the winding up of the partnership and the appointment of a receiver to take control of the partnership assets, realise them, and distribute the proceeds in accordance with s 44.

Damages for Breach

Where a partner has breached the partnership agreement or their statutory duties, damages may be available to compensate you for the financial loss suffered as a result. Quantifying those damages often requires financial expert evidence.

Recovery of Partnership Property

Where a partner has taken partnership property for their own use, cash, equipment, intellectual property, or client relationships, you can seek orders for the return of that property or its value.

Should You Mediate or Litigate?

Not every partnership dispute ends up in court, and in many cases it is better that it does not. Litigation is expensive, time-consuming, and, in a partnership context, almost certainly destroys any prospect of preserving the business relationship. Mediation is often faster, cheaper, and more flexible in the outcomes it can achieve.

When Mediation Makes Sense

If the core dispute is about money, a profit split, a buyout price, or a capital account, mediation with a skilled commercial mediator can often resolve the dispute in one or two days. Both parties retain control over the outcome rather than handing it to a judge. Queensland has a strong pool of experienced commercial mediators, and many partnership agreements already require mediation before litigation.

For smaller disputes, the Queensland Civil and Administrative Tribunal (QCAT) has jurisdiction over certain commercial disputes. You should obtain legal advice as to whether QCAT is appropriate for your particular matter, as jurisdictional rules apply.

When You Need to Go to Court Immediately

Some situations cannot wait for mediation. If your partner has emptied the business bank account, is transferring partnership assets to a related entity, or has started a competing business and is actively soliciting your clients, you may need to apply to the Supreme Court of Queensland for urgent injunctive relief on an ex parte basis (without notice to the other party).

To obtain an interlocutory injunction, the court will apply the test from American Cyanamid Co v Ethicon Ltd (as applied in Queensland), asking whether there is a serious question to be tried, whether the balance of convenience favours the grant of the injunction, and whether damages would be an adequate remedy. Where assets are at risk of dissipation, you may also seek a freezing (Mareva) order.

Speed is critical. Courts look unfavourably on applicants who delay in seeking urgent relief. If you suspect your partner is acting against your interests, contact a commercial litigation lawyer immediately.

The Difference Between a Partnership and a Company Dispute

Business owners sometimes treat partnership disputes and company disputes as interchangeable. They are not, and confusing the two can have serious consequences.

In a partnership, there is no separate legal entity. The partners are personally liable for the firm’s debts and obligations. If the partnership cannot pay a creditor, the creditor can sue the partners personally and pursue their personal assets, home, savings, investments.

In a company, the company is a separate legal entity under the Corporations Act 2001 (Cth). Shareholders generally have limited liability. Disputes between shareholders are governed by different legal frameworks, including the Corporations Act, the company’s constitution, and (in some cases) shareholder agreements. For more information on that topic, see our guide to shareholder disputes.

The distinction also matters for insolvency. If a partnership becomes insolvent, the partners are personally exposed. A company in financial difficulty can be placed into voluntary administration or liquidation, the shareholders’ personal assets are generally protected (subject to insolvent trading claims against directors). See also our guide on terminating a commercial contract in Queensland for related guidance on managing contractual obligations when a business relationship breaks down.

5 Mistakes Partners Make When a Dispute Erupts

1. Sending emotional messages or emails. The moment a dispute arises, every message you send becomes potential evidence. An intemperate email sent at 11pm can be used to undermine your credibility in court. Keep all communications measured and professional, or have your lawyer communicate on your behalf.
2. Withdrawing funds without authority. When a partner suspects the other is about to take money out of the business, the instinct is sometimes to act first. That is almost always a mistake. Unauthorised withdrawals can expose you to liability for breach of fiduciary duty and undermine your position in any subsequent litigation.
3. Delaying legal advice. The earlier you obtain legal advice, the more options you have. Waiting until the other partner has already dissolved the partnership, transferred the assets, or locked you out of the accounts significantly narrows your remedies. Time limits also apply.
4. Destroying or withholding documents. Under s 28 of the Partnership Act, partners must render true accounts and full information. Courts take a very dim view of parties who delete communications, shred records, or refuse to produce documents. Document preservation is essential from the moment a dispute appears likely.
5. Trying to negotiate alone without understanding your legal position. Partners in dispute sometimes attempt to reach a deal without legal advice, often under pressure or when emotions are running high. This can result in agreements that are unfavourable, unenforceable, or that inadvertently release valuable claims.

Talk to a Commercial Litigation Lawyer in Brisbane

Business partnership disputes move quickly and the window to protect your position can close without warning. If your partner has acted in a way that threatens the business, or your share of it, you need clear legal advice now, not in a week.

Boss Lawyers acts for business owners across Queensland in commercial litigation matters including partnership disputes, dissolution proceedings, injunctive relief applications, and partnership property recovery. We give you a direct assessment of your position, your options, and what it will realistically take to protect what you have built.

Call Boss Lawyers on 1300 267 711 or contact us online to arrange a consultation.

This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances.