Joining Forces: Two Farms Become One

Our client was a sheep farmer and originally had her own farm in the North of England, but after she met and married Mr D – also a farmer – they joined their separate businesses together and bought a farm near Monmouth. After a few years the client was running the farm on her own, whilst Mr D had started working for a haulage firm and was no longer doing farm work or involved in the day to day running of it.

The Marriage Breaks Down and a Financial Shock Follows

Unfortunately the marriage broke down and one day Mr D suddenly moved out. While still recovering from this bombshell, the next thing the client knew was that she had received a letter demanding a very large sum of money. It was from her husband’s solicitors, who said that he was a 50% partner in the farm business and was entitled to half the sheep, half the vehicles, half the profits – essentially he wanted half of the farm.

No Partnership Agreement? The Default Legal Position Applies

When the client first came to see us, we asked to see the partnership agreement. This is a document that sets out the following:

• Rights and responsibilities of partners in a business
• Who owns what share
• What should happen if the partnership comes to an end

The client said that she and her husband had never had such a document. In that case, we told her, the default position applies, which is generally that a departing partner can demand that the partnership assets are sold, the debts are paid and what’s left is distributed equally to the partners.

Selling the Farm Would Have Been Devastating

Selling the farm assets and business would have been a disaster for our client. She had spent her working life building up her flock. While her husband had been a partner in name, she was the one who had done the early mornings and late nights, had been out in all weathers and had expanded and grown the business. It would be very unfair for all that hard work to come to nothing but the client’s problem was that she did not have the funds to pay 50% of the value of the business to her husband.

Negotiating a Settlement to Save the Farm

There was no way of resisting Mr D’s claim because there was no agreement; the default position was that he could demand the sale of the business assets or a 50% share of the farm. A partnership agreement could have set out the shares each of them had in the business.

However we set out to negotiate a settlement of the claim. After discussions with the husband’s solicitors, we found out that he had no need of a lump sum payment and would be willing to receive what was owed spread over a number of years. The client realised that she could raise sum funds by selling some of her sheep and some of the farm’s equipment, thus she could make the first two years’ payments from that. Her accountant advised her that on current trends she should be able to make enough profit to pay Mr D the remaining payments in the years after that.

A Positive Outcome for the Farmer

The result was that our client kept the farm and is thriving. She is minus a husband but after a few years she will be the sole owner of the farm business.

Why Partnership Agreements Matter in Farming Businesses

This case underlines the importance of a partnership agreement which sets out ownership shares, and the process for a partner leaving the partnership.

Without one, even informal business arrangements between spouses or family members can lead to costly and avoidable legal disputes.

Need Advice on Partnerships or Business Disputes?

If you’re facing a dispute over business assets or a partnership breakdown – especially without a formal agreement in place – the Feakes Legal team are here to help with clear, practical legal advice. 

Call us today on 01291 639280 or
Email us at info@feakes-legal.com to arrange a free initial and confidential consultation.

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