Removing a boat group shareholder.

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pcatterall

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Our group comprises 6 members.
Everbody seems to get on fine but I am considering what we would do if problems develop with a member.
A scenerio could be a member who continually leaves the boat in a poor condition, causes excessive wear and tear etc.
There is no mechanism for dealing with this in our agreement.
Various sample formats I have looked at dont seem to cover this.
Has anyone, either, experienced this sort of problem or can recommend a form of words which will cover it?
 
Include a clause that requires 5 of the 6 members to exclude the remaining one by buying him out, all 5 members to be in agreement and of course all 6 members need to be in agreement prior to instituting the clause.
 
I think it is pretty dangerous to get a legal opinion of a group of people like us.

I used to teach Partnership Law quite some time ago and I know there is an Australian Partnership Act and just now I confirmed there is a UK Partnership Act so any Partnership Agreement you come up with will have to comply with that.
I suggest you search:

  • Dissolution of Partnerships
  • Dissolution of Partnership clauses
  • Sample Partnership Agreements
 
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So is a problem is already manifest then ? This is the sort of question any serious joiner of a group ownership should have already asked and understood the answer before signing up, as indeed it could apply to him as the subject of concern later.
 
Presumably a majority decision could be made to dissolve the partnership of six, and a new partnership of five could agree to buy the boat off of the original partnership. (In practice, once the proposal was on the table the 'problem' one member might well take the hint and bow out on mutually agreeable terms before it came to that, though it is true there are some bloody difficult people about.) The new partnership could subsequently decide to expand to include a new sixth member, if they wished.

Reminds me of a friend who jointly owned a big catamaran with one other person. The deal was they each had a hull each (two cabins and a heads/shower each hull). They could each leave their own hull however clean/(un)tidy/dirty they liked. There was a striking difference between them. :D The other party could use the other partners hull (for friends etc.), but had to accept it as it was and leave it as they found it.
 
The procedure to expel a partner would have to be spelled out in the Partnership Agreement because:

Partnership Act 1890 - Wikipedia
https://en.wikipedia.org/wiki/Partnership_Act_1890

Jump to Liability of partners - Main provisions Each partner is entitled to participate in management, get an equal share of profit, an indemnity in respect of liabilities assumed in the course of business and the right to not be expelled by other partners. A partnership ends on the death of a partner, unless an agreement is made prior to the deaths.
 
Some friends of mine jointly campaign a small racing boat , where the money is more about yearly expenses than capital.
Their approach is that they agree to commit to a season at a time.
People come and go from one season to the next.

So maybe for a cruising boat, a time limited partnership which plans to be dissolved after say 5 years might work?

I have heard of all sorts of sharing arrangements working or not working, I think there is no right answer which suits everyone.
But I feel there always needs to be an agreed exit strategy.
 
Our first sailing boat was a third share. It was a tidy 22 year old cruiser racer. The owner was struggling with the fixed costs-mooring and annual haulout, so he sold two shares. IIRC, an RYA agreement was used.

He though that as he was the owner initialy this confered the maintenance to the other shareholders-and the costs!

I soon put him right. The other partner was not quite so up front as me. He was quite shocked when I asked " Are you going to pay your fair whack and do the graft, or what?

This cleared the air for a bit, but things slipped back after a couple of seasons.

We sold out to another partner. I warned him about the bad guy.

I made it clear to him that " Getting money for the share of the costs is like trying to poke butter up a Porcupine's arse with a red hot knitting needle! "

After the money was in my bank, of course.............................
 
Yes, I drew up the agreement and followed the RYA format but cant find anything addressing the issue of a rogue partner!

My thoughts are to get the whole group to agree a clause or clauses dealing with non payment of costs and some sort of 'compulsory purchase' of the rogue shareholder with the other 5 owners all agreeing.

It may not be enforceable in law but would at least be a start.
 
coopec said:
The procedure to expel a partner would have to be spelled out in the Partnership Agreement because:

Partnership Act 1890 - Wikipedia
https://en.wikipedia.org/wiki/Partnership_Act_1890

Jump to Liability of partners - Main provisions Each partner is entitled to participate in management, get an equal share of profit, an indemnity in respect of liabilities assumed in the course of business and the right to not be expelled by other partners. A partnership ends on the death of a partner, unless an agreement is made prior to the deaths.
Click to expand...


Definition of a partnership under that Act is "...the relation which subsists between persons carrying on a business in common with a view of profit." so, unless they have formed a business around the partnership I would have thought that this didn't apply in the OP's case. It also says:

Rules for determining existence of partnership.


In determining whether a partnership does or does not exist, regard shall be had to the following rules:


(1) Joint tenancy, tenancy in common, joint property, common property, or part ownership does not of itself create a partnership as to anything so held or owned, whether the tenants or owners do or do not share any profits made by the use thereof.
(2) The sharing of gross returns does not of itself create a partnership, whether the persons sharing such returns have or have not a joint or common right or interest in any property from which or from the use of which the returns are derived.


Doesn't mean it's not a good idea to have a partnership agreement of course, but the laws used to decide upon contract breaches, etc. may be different. As above the OP really needs to consult a suitably experienced legal person - benjenbav may be able to give a a bit of direction here perhaps?.
 
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