One of the most important – and often underestimated – aspects of a general partnership is personal liability in a general partnership (VOF). Many entrepreneurs start a general partnership (VOF) because of its simplicity and low costs, but insufficiently realise the risks involved.
In this article, you will read when you as a partner are personally liable, what this means in case of conflicts or termination of the cooperation, and how you can limit these risks as much as possible.
What is personal liability in a general partnership (VOF)?
In a general partnership (VOF), all partners are jointly and severally liable for the debts of the business. This means that creditors can approach not only the general partnership (VOF), but also you personally as a private individual.
Personal liability in a general partnership (VOF) extends to your private assets, such as savings, your own home, or other possessions.
Why is liability in a general partnership (VOF) so far-reaching?
Unlike a private limited company (BV), a general partnership (VOF) is not a legal entity. The business and the partners are closely linked legally.
This means that:
- you are liable for debts incurred by your partner;
- creditors may choose whom they hold liable;
- internal arrangements offer no protection against third parties.
It is precisely during conflicts between partners that this risk often becomes visible.
When are you personally liable?
Personal liability in a general partnership (VOF) arises in situations such as:
- outstanding debts to suppliers;
- loans and financing;
- rent arrears;
- damage claims from customers;
- tax debts.
Even when you were not personally involved in creating 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.
Yet personal liability in a general partnership (VOF) remains in effect. Creditors do not need to take internal conflicts or task divisions into account.
Liability in case of conflict or termination of the general partnership (VOF)
In conflicts between partners, liability often comes into sharper focus. When the cooperation deteriorates, ongoing obligations remain.
Also when terminating a general partnership (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 incurred during your participation in the general partnership (VOF).
Therefore, it is crucial that:
- the withdrawal is properly documented legally;
- creditors are informed;
- the Chamber of Commerce is notified in time.
A careless withdrawal can lead to prolonged claims.
How can you limit personal liability?
Although complete exclusion is not possible, you can limit risks by:
- clear arrangements in a partnership agreement;
- active oversight of financial obligations;
- timely intervention in conflicts;
- careful settlement upon termination or withdrawal.
International aspects
In international activities or with foreign creditors, personal liability in a general partnership (VOF) can carry additional risks. Different legal systems and enforcement options then play a role.
General information about business structures can be found at the Chamber of Commerce.
Common mistakes regarding liability
- thinking that internal arrangements offer protection;
- responding too late to financial warning signs;
- withdrawing unprepared;
- letting conflicts escalate;
- not seeking legal advice.
What can Arslan Advocaten do for you?
Arslan Advocaten assists entrepreneurs in disputes regarding personal liability in a general partnership (VOF). We assess your risks, advise on strategy, and guide proceedings when necessary.
Read more about our expertise in business law and regarding withdrawal from a general partnership (VOF).
Costs and litigation funding in general partnership (VOF) disputes
In disputes regarding personal liability in a general partnership (VOF), we do not, in principle, work on a no cure no pay basis. These types of cases require careful legal analysis.
However, this does not mean you have to bear these costs yourself. In many business disputes, litigation funding is possible.
We work together with an independent litigation funder who – after a substantive assessment – can decide to pay all litigation costs, including:
- legal fees;
- court fees;
- expert costs;
- costs on appeal.
If litigation funding is granted, you as a client pay nothing on balance. The litigation funder bears the full financial risk.
The litigation funder only receives a fee 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 specialises in business disputes, including general partnership (VOF) conflicts and liability issues.
Would you like to know what your personal risks are within a general partnership (VOF)?