One of the most important – and often underestimated – aspects of a general partnership is the personal liability in a VOF. Many entrepreneurs start a VOF because of its simplicity and low costs, but insufficiently realize what risks are associated with it.
In this article you can read when you are personally liable as a partner, what this means in the event of conflicts or termination of the collaboration and how you can limit these risks as much as possible.
What is personal liability in a VOF?
In a VOF, all partners are jointly and severally liable for the debts of the company. This means that creditors can turn not only to the VOF, but also directly to you as a private individual.
The personal liability in a VOF extends to your private assets, such as savings, your own home or other possessions.
Why is liability in a VOF so far-reaching?
Unlike a BV, a VOF is not a legal entity. The company and the partners are legally closely connected.
This means that:
- you are liable for debts incurred by your partner;
- creditors may choose whom they hold liable;
- internal agreements offer no protection against third parties.
It is precisely in the event of conflicts between partners that this risk often becomes visible.
When are you personally liable?
The personal liability in a VOF occurs, among other things, with:
- outstanding debts to suppliers;
- loans and financing;
- rent arrears;
- claims for damages from customers;
- tax debts.
Even if you were not personally involved in the origin of the debt, you can be held fully liable.
What if your partner makes mistakes?
A common problem is that one partner enters into financial or contractual obligations without consultation or contrary to agreements.
Nevertheless, the personal liability in a VOF remains intact. Creditors do not have to take internal conflicts or division of tasks into account.
Liability in the event of a conflict or termination of the VOF
In the event of conflicts between partners, liability often comes to the fore even more sharply. When the collaboration deteriorates, ongoing obligations remain.
Also when terminating a VOF or when a partner withdraws, liability remains an important point of attention.
Do you remain liable after withdrawal?
Yes, in many cases you remain liable for debts that arose during your participation in the VOF.
That is why it is crucial that:
- withdrawal is legally correctly recorded;
- creditors are informed;
- the Chamber of Commerce is informed in good time.
Careless withdrawal can lead to long-term claims.
How can you limit personal liability?
Although complete exclusion is not possible, you can limit risks by:
- clear agreements in a partnership agreement;
- active supervision of financial obligations;
- timely intervention in the event of conflicts;
- careful settlement upon termination or withdrawal.
International aspects
With international activities or foreign creditors, the personal liability in a VOF can entail extra risks. Different legal systems and recourse options then play a role.
General information about legal forms can be found at the Chamber of Commerce.
Common mistakes regarding liability
- thinking that internal agreements offer protection;
- reacting too late to financial signals;
- withdrawing unprepared;
- letting conflicts escalate;
- not obtaining legal advice.
What can Arslan Advocaten do for you?
Arslan Advocaten guides entrepreneurs in disputes regarding personal liability in a VOF. We assess your risks, advise on strategy and guide proceedings when necessary.
Read more about our expertise within corporate law and withdrawing from a VOF.
Costs and litigation funding in VOF disputes
In disputes about personal liability in a VOF, we do not, in principle, work on the basis of free legal assistance. These types of cases require careful legal analysis.
However, this does not mean that you have to bear these costs yourself. In many business disputes, litigation funding is possible.
We work with an independent litigation funder who – after substantive assessment – can decide to pay all litigation costs, including:
- lawyer’s fees;
- court fees;
- costs of experts;
- costs in appeal.
If litigation funding is granted, you as a client ultimately do not have to pay anything. The litigation funder bears the full financial risk.
The litigation funder only receives a fee upon success. For you, this means that litigating is possible without financial risk.
About the author
This article was written by Onur Arslan, lawyer and founder of Arslan Advocaten. He specializes in business disputes, including VOF conflicts and liability issues.
Do you want to know what your personal risks are within a VOF?
👉 View Onur Arslan’s profile and contact us directly.
Read also
- Bankruptcy of a contracting party: what are your rights as an entrepreneur?
- Customer does not pay due to defects? These are your rights as an entrepreneur
- International debt collection in the Netherlands
Frequently Asked Questions
When am I personally liable in a VOF?
You are personally liable for debts incurred by the VOF, such as outstanding bills, loans, rent arrears and tax debts. This also applies if you were not directly involved in the origin of the debt.
What happens if my partner makes mistakes or concludes contracts without consultation?
Even then, the personal liability of all partners remains, because creditors can turn directly to you for the settlement of debts, regardless of internal agreements.
Do I remain liable after my withdrawal from the VOF?
Yes, you can remain liable for debts that arose during your participation in the VOF, unless you have correctly recorded this and informed creditors.
How can I limit my risk of personal liability?
You can limit risks by making clear agreements in a partnership agreement and following the correct legal procedures upon withdrawal, but complete exclusion is not possible.
