Strategies for Resolving Partnership Disputes When Your Partner Withdraws

By Davis Law Group Trial Attorneys

Partnership disputes rarely begin with courtroom battles. More often, they start quietly, with unspoken tensions, secret side deals, and decisions made without everyone’s knowledge. When your business partner stops acting like a true partner, the damage can grow quickly. Understanding your rights, recognizing warning signs, and knowing when to act can protect your business and your interests.

What Fiduciary Duty Means in Georgia and Tennessee

In Georgia and Tennessee, partners owe each other a fiduciary duty. This means each partner must act with loyalty, honesty, and good faith toward the partnership and fellow partners. The duty requires:

• Avoiding conflicts of interest

• Not profiting at the partnership’s expense without consent

• Sharing important information openly

• Acting in the best interest of the business

  
  

If a partner secretly makes deals or uses partnership assets for personal gain, they breach this duty. Courts in both states take fiduciary breaches seriously because they undermine trust and the foundation of the partnership.

Common Signs of Financial Self-Dealing

Financial self-dealing happens when a partner uses the business for personal benefit without approval. Watch for these signs:

• Unexplained withdrawals or transfers from business accounts

• Side agreements with vendors or clients that exclude other partners

• Expenses or purchases that don’t align with business needs

• Lack of transparency in financial reporting

• Refusal to share financial records or delayed access

  
  

For example, a partner might secretly sell company products to a friend at a discount, pocketing the difference. Or they might approve payments to a company they own without telling others. These actions hurt the business and violate fiduciary duties.

Why Waiting Makes Things Worse

Ignoring or delaying action when you suspect a partner is acting against the partnership can cause serious harm:

• Financial losses can multiply

• Evidence may disappear or become harder to trace

• Trust erodes, making cooperation impossible

• Other partners may become unaware of the problem until it’s too late

  
  

Taking early steps to address concerns can prevent escalation. Waiting often means losing control over the situation and facing more complicated disputes.

When to Pull Financial Records

Accessing financial records is critical when you suspect wrongdoing. You should request records if you notice:

• Irregularities in bank statements or accounting reports

• Missing invoices or unexplained expenses

• Changes in financial policies without partner approval

• Sudden drops in profits or cash flow

  
  

In Georgia and Tennessee, partners generally have the right to inspect books and records. If your partner resists, this may be a red flag. Early review helps identify problems and supports any legal or negotiation steps you may need to take.

Why Informal Partnerships Are the Riskiest

Many partnerships start informally, based on trust and handshake agreements. While this can work initially, informal partnerships carry risks:

• Lack of clear roles and responsibilities

• No written agreements on decision-making or profit sharing

• Difficulty proving terms if disputes arise

• Greater chance of misunderstandings and conflicts

  
  

Without formal agreements, resolving disputes becomes harder and more expensive. Partners may not fully understand their fiduciary duties or legal rights. Formalizing your partnership with clear contracts and regular financial oversight reduces risks and protects everyone involved.

If your business partner stops acting like a partner, you don’t have to face the situation alone. Davis Law Group offers experienced legal support to help you:

• Understand your fiduciary rights under Georgia and Tennessee law

• Investigate financial irregularities and self-dealing

• Obtain and review financial records legally

• Negotiate resolutions or prepare for litigation if necessary

• Formalize partnership agreements to prevent future disputes

  
  

Our team works closely with you to protect your business and interests, providing clear advice and practical solutions tailored to your situation. Schedule a consultation or call 404-446-2932.