When Partners Go Haywire - written by Atty. Gabriel Cosh

Partnerships are one of the most common types of business organization. Partnerships are composed of a group of individuals having for their purpose the promotion and propagation of a unified business and economic interest. The formation of a partnership is actually dependent on the fiduciary relationship of the persons composing the same. Fiduciary which means the relationship of the partners is grounded on such high degree of trust and confidence, not only with the affairs of the business but with their own personal circumstances as well.

The predicament therefore arises when a good and harmonious relationship that encompasses the act of one partner with that of another has been severed or it has become so problematic that it would already drastically affect the business interest of the partnership. What would be its consequent effects to the existence of the partnership? Would it actually lead to its dissolution, or would it survive despite such brewing ill-will between the partners? The answer is quite obvious in that the partnership would cease to exist upon the happening of such a dilemma.

Breach of partnership roles, duties, and responsibilities, are only some of the reasons that would make the relationship of the partners at such an unstable and antagonistic state. Being established based on fiduciary relationship between one from the other, severance of such interaction would naturally lead to its ultimate end. The disposition of the erring partner's partnership interest to another person could not be considered as relieving the pressures of the partnership's dissolution.

Even if the erring partner's interest has been sold to another, if at all this act is allowed, it would not operate to revive the partnership, because the seeming new partner is in and invested with such trust and confidence by the other partners. The seeming new partner would thus be considered as an outsider and that not having the fiduciary relation with the other partners would not warrant the continuous existence of the same.

This is how complex and how personalized partnerships as a business organization are. They are not merely a conglomeration of people who have the same interest when it comes to a business endeavor, but they are bound with one another on a circle of trust and confidence, which upon it being broken naturally would lead to the severance of the partnership as a whole. Of course the opposite is also prevalent, if such healthy and harmonious relationship is kept in constant, then high business retains can continue to exist.