Exiting a VOF is a major step for many entrepreneurs. A general partnership is based on cooperation and trust. When that trust disappears and your partner does not want to cooperate on a solution, the situation can quickly come to a standstill. Many entrepreneurs then wonder: can I exit a VOF without my partner’s consent?
In this article, we explain when you can exit a VOF, what risks are involved, and how you can legally protect your position.
What is a VOF and why is exiting complex?
A VOF is a form of collaboration in which two or more partners jointly run a business. Unlike in a BV, partners are personally liable for the company’s debts.
It is precisely this personal liability that makes exiting a VOF legally and financially complex. A misstep can mean that you remain liable even after you leave.
When does the desire to withdraw from a VOF arise?
The desire to withdraw from a VOF usually arises with structural problems, such as:
- a conflict with your partner;
- agreements are not honored;
- unequal effort or involvement;
- financial uncertainty or distrust;
- personal tensions that affect business.
In many cases, one partner wants to quit, while the other partner wants to continue the cooperation or refuses any form of cooperation.
What do the contract and agreements say?
When leaving a general partnership it is essential to first look at the partnership agreement (collaboration contract).
It often contains provisions on:
- exit of a partner;
- notice periods;
- valuation of the share;
- settlement of assets and debts;
- continuation of the business.
Is a clear arrangement missing? The law still offers possibilities, but this often leads to disputes and legal proceedings.
Leaving a VOF without consent: is that possible?
Yes, leaving a VOF without the consent of your partner is possible in certain situations. For example, this is possible when:
- the collaboration has been permanently disrupted;
- your partner consistently fails to honor agreements;
- continuation of the collaboration can no longer reasonably be expected of you.
However, exiting without proper preparation carries risks. A careless exit can lead to liability or claims for damages.
Difference between exiting and dissolving the VOF
It is important to distinguish between:
- withdrawal of one partner (the VOF can continue to exist);
- dissolution of the VOF (the partnership ends entirely).
Which route is appropriate depends on the agreements, the extent of the conflict, and the interests of the parties involved.
Personal liability upon withdrawal
An important consideration when withdrawing from a VOF is personal liability.
Even after exiting, you may remain liable for debts that arose during your participation in the VOF. Therefore, it is crucial to:
- properly document the exit;
- inform creditors;
- make clear agreements on the settlement.
What if your partner is uncooperative?
In practice, we regularly see that a partner:
- refuses to cooperate with the exit;
- withholds information;
- blocks the financial settlement;
- threatens to file claims.
In such situations, legal assistance may be necessary to safeguard your rights and compel a resolution.
International aspects
When a partner lives abroad or the general partnership operates internationally, it can make leaving a general partnership more complex.
General information about collaborating as an entrepreneur can be found at the Chamber of Commerce.
Common mistakes when leaving a general partnership
- leaving in haste without legal advice;
- failing to account for liability;
- verbal agreements without documentation;
- letting emotions take over;
- litigating without a strategy.
What can Arslan Advocaten do for you?
Arslan Advocaten assists entrepreneurs with the exiting a VOF and conflicts between partners. We analyze your position, advise on the best route and guide negotiations or legal proceedings.
Also read more about our expertise in business law, about the termination of a general partnership and in conflicts with business partners.
Costs and litigation funding in general partnership disputes
In disputes about leaving a general partnership we generally work not on a no cure no pay basis. These matters require a careful legal and strategic approach.
However, that does not mean that you have to bear these costs yourself. In many general partnership disputes it is possible to make use of litigation funding.
We work with an independent litigation funder who – after a substantive assessment – can decide to pay all litigation costs, including:
- attorney’s fees;
- court fees;
- expert fees;
- costs on appeal.
If litigation funding is granted, you as the client ultimately pay nothing. The litigation funder bears the full financial risk.
The litigation funder only receives compensation upon success. For you, this means that litigation is possible without financial risk.
About the author
This article was written by Onur Arslan, lawyer and founder of Arslan Advocaten. He specializes in commercial disputes, including conflicts within VOF structures.
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