Dissolution of a general partnership
Two brothers, a dairy farm and a deadlocked wind-down
In 2010, two brothers start an agricultural business as a general partnership: first rearing young cattle, later expanding into a full dairy farm with 265 head of cattle and more than 70 hectares of farmland. In 2015, the situation escalates: one brother assaults the other, for which he is convicted in criminal proceedings. The brothers decide to end their cooperation.
In a termination agreement, they agree that the brother who was not assaulted will continue the business, provided he can finance the purchase price. That purchase price is to be determined by experts. In the meantime, the other brother in fact carries on running the business.
What follows is a decade of legal battle. The brothers reach no agreement on the purchase price. The expert-determination procedure stalls. One registers his own sole proprietorship. The other refuses to provide information. Proceedings follow over penalty payments, prohibited legal acts and performance of the partnership agreement. The district court dismisses the claim for dissolution. The continuing brother lodges an appeal.
Court of Appeal: serious cause justifies immediate dissolution
The Court of Appeal steps in where the district court did not. Under Section 7A:1684 DCC, the court may dissolve a partnership on the ground of serious cause. The court holds that such cause exists: relations have been seriously disturbed for more than ten years, cooperation has in fact become impossible, and the earlier termination agreement has not resulted in a solution.
The court dissolves the VOF as of the date of the judgment and reserves the allocation and winding-up to itself. The starting point is that the brother who has in fact been running the business for ten years is allocated the enterprise — but the final decision will only follow after an expert valuation.
The court then lays down a detailed management arrangement. The continuing brother has exclusive authority to run the business, but requires his brother's consent for legal acts exceeding €20,000. For continuing obligations (rent, employment contracts), that threshold applies on an annual basis. Splitting up acts in order to stay below the threshold counts as a breach. In addition, he must report every quarter on all legal acts exceeding €5,000.
The court justifies this arrangement by pointing to the specific circumstances of an agricultural business: decisions about cattle, farmland, animal feed and staff must be capable of being taken quickly. The earlier arrangement in the partnership agreement — which assumed daily consultation between two active partners — has been a dead letter for years. The other brother does, however, have an interest in a business in good condition, in case he ends up being the one to continue it.
What does this judgment teach us about partnership disputes between family members?
This judgment illustrates a pattern that is familiar in many family partnerships: a termination agreement that does not end the relationship but instead becomes a source of new disputes. Three conclusions:
First: a termination agreement without hard deadlines and a binding valuation mechanism can lead to years of deadlock. The 2015 agreement left too much open and produced ten years of conflict. Second: a court that dissolves a VOF can at the same time lay down a bespoke management arrangement that takes account of the nature of the business. The €20,000 threshold with quarterly reporting is a practical compromise between business continuity and the interests of the non-active partner. Third: the penalty-payment arrangement for consent to legal acts previously imposed by the district court was abolished by the Court of Appeal. The court acknowledged that this arrangement had proved unworkable in practice for an agricultural business that requires operational decisions on a daily basis.
More on corporate disputes and corporate litigation at Prime Law.
Frequently asked questions
When can a court dissolve a general partnership?
Under Section 7A:1684 DCC, a court may dissolve a general partnership on the ground of serious cause. Such cause exists where the cooperation is permanently disrupted, for example through seriously disturbed relations, repeated non-performance or an irreconcilable difference of view about the running of the business.
What happens to the business assets after a general partnership is dissolved?
Dissolution is followed by winding-up: the assets and liabilities are valued, debts are settled and the remaining assets are divided. The court may allocate the business to one of the partners against payment of the value of the other partner's share.
Can a court lay down a management arrangement on dissolution?
Yes. On dissolution, a court may lay down a management arrangement that determines who is authorised to act on behalf of the dissolved partnership, what limits apply and what obligation to provide information exists towards the other partner. That arrangement applies until the winding-up has been completed.
ECLI:NL:GHARL:2025:8082, Court of Appeal Arnhem-Leeuwarden, 16 December 2025.
Cited case law
Courts of Appeal: ECLI:NL:GHARL:2025:8082
See also
- Withdrawal in a conflict of interest: Vlees Online B.V.
- 50/50 deadlock: provisional relief judge compels a share transfer
- Director ordered to pay €975,000 for muddling on with a loss-making company
- Former partner remains liable for rent arrears after dissolution of a vof
- More about partnership disputes