Introduction
The Dutch partnership, the general partnership (VOF), the professional partnership (maatschap) and the limited partnership (CV), is a form of cooperation without legal personality. That makes the internal relations and the liability fundamentally different from those in a private limited company (BV). Disputes arise over dissolution and the withdrawal of a partner, over liability for debts, and over the settlement and valuation at the end. The applicable law dates largely from 1838 and is, moreover, on the eve of a far-reaching reform.
Liability of the partners
In a general partnership the partners are jointly and severally liable for the partnership's debts (Article 18 of the Commercial Code, WvK). In a professional partnership it is different: the partners are in principle liable in equal shares (Articles 7A:1679-1681 of the Dutch Civil Code, DCC), unless they have jointly accepted an engagement, in which case they are jointly and severally bound under Article 7:407(2) DCC. The Supreme Court worked out that distinction in the case on a law firm partnership, confirming also that a creditor can have recourse both to the partnership's separate estate and to the partners' private assets (Supreme Court 15 March 2013, ECLI:NL:HR:2013:BY7840).
That liability carries over on joining and leaving. A partner who has left remains liable for the obligations that arose during their membership. Conversely, an incoming partner is not free of the past: the Supreme Court held that the managing partner of a limited partnership is also liable for debts that had already arisen before they joined (Supreme Court 13 March 2015, ECLI:NL:HR:2015:588). Anyone joining or leaving must therefore know precisely what they stand for.
Dissolution and withdrawal
A partnership can be dissolved on the grounds stated in the agreement and by the court for weighty reasons, such as a permanently disturbed relationship between the partners. Instead of full dissolution, the court can also have a single partner withdraw, so that the business can be continued by the others. The partnership agreement often already governs how withdrawal, continuation and takeover proceed; the interpretation of that agreement is therefore regularly the starting point of the dispute.
Settlement and valuation
On dissolution or withdrawal a settlement must be made: the value of the departing partner's share is determined and set off against what they still owe the partnership. The valuation, often of a business without a market price, is usually the crux of the dispute. A sound provision in the partnership agreement on the valuation standard and the reference date prevents that from becoming the very thing litigated.
The forthcoming Partnership Modernisation Act
Dutch partnership law is being overhauled by the Partnership Modernisation Act (Wet modernisering personenvennootschappen), which has not yet entered into force and whose commencement date is still undetermined. Among other things the bill introduces legal personality for the partnership and abolishes the distinction between the professional partnership and the general partnership, after which both forms are simply called a partnership. The rules on joining, leaving and liability are also amended. As long as the Act is not in force the current law continues to apply, but for long-running cooperations it is worth taking the coming change into account now.
What decides the outcome
The outcome is determined by the partnership agreement, whether there are weighty reasons, and the valuation on settlement. A party bringing a dispute between partners before the court sharply chooses the basis, dissolution or withdrawal, and the valuation claimed, and takes account of the continuing liability of incoming and departed partners.