Right to claim in undivided community in commercial partnership

Right to claim in undivided community in commercial partnership

If a commercial partnership (VOF) is terminated, there is often a debate about the division of the assets. An independent audit report can be a solution in such cases. But can a partner claim his share in the undivided community of a commercial partnership prior to the division? This issue was addressed in recent court proceedings. Dutch corporate lawyer Hidde Reitsma explains this case.

 

 

Winding-up of company due to termination

The reason for the conflict was simple. After a commercial partnership (VOF) was terminated, the community of the general partnership had to be divided. An audit report stated that partner A had his own assets of €35,000 in the partnership and partner B somewhat less than €50,000. These amounts were connected to a still outstanding claim on a client.

Partner demands share in general partnership

Division had not yet taken place, but partner A could not or would not wait. He instituted a claim against partner B and against the client. Partner A demanded that they should be jointly and severally sentenced to pay €35,000, the share of partner A in the partnership. According to partner A he was entitled to demand his share in the claim on the client.

Partners in an undivided community: joint right to claim

The court does not agree with this opinion. The claim of the partnership on the client is part of the partnership’s community of property. Division has not yet taken place and partner A does not claim a division in these proceedings. Partners A and B are therefore joint partners in the undivided community of property. Partners in a community have one joint right to claim on the debtors of that community. This excludes partners being able to demand a judicial ruling for the entire claim or a part thereof.

Claim for partner privately impossible

Although a partner is entitled to institute a legal claim for the community independently from the other partner, in such a case the partner has to act on behalf of the joint partners. That is not the case here, because partner A claims payment of (part of) the claim privately. Therefore the claim by partner A on the client is dismissed.

Claim for division partnership community

The claim by partner A for his share on the other partner, partner B, is also dismissed. If partner A wants to receive his share he has to claim division of the partnership community. Partner A thus gets nothing in this case. Although it is agreed between the parties that he is entitled to an amount more or less the size of the claim, he did not follow the proper procedure.

AMS Lawyers for advice in termination and division commercial partnership

Under the law each partner is all times entitled to claim division of a communal asset. In this division the partners shall act according to the requirements of reasonableness and fairness. If the partners fail to reach a mutual agreement, at the request of either party the court can establish the manner of division (article 3:185 of the Civil Code). The court can also determine the division.

Hidde Reitsma - Advocatenkantoor AMS Advocaten
Hidde Reitsma Hidde has a varied consultancy and litigation practice, focusing on corporate law and insolvency law. He frequently acts in proceedings before the Enterprise Chamber of the Court of Appeal in Amsterdam and in cases on directors’ liability. Hidde also advises on drawing up and negotiating contracts, mergers and acquisitions and joint ventures. Follow Hidde also on Google or LinkedIn. Hidde is available via e-mail and +31 (0)20-3080315.
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