Business Partner Making Decisions Without Me: Legal Steps In Australia

When you start a business with someone, it’s usually because you share a vision. You expect teamwork, transparency and fair decision-making.

So it can be a real shock when you realise your business partner is making decisions without you.

Sometimes it starts small - a supplier “quickly” signed, a new hire brought on “to help”, a big discount offered to a customer without checking. Other times it’s more serious: money leaving the business account, assets being sold, or contracts being entered into that you never agreed to.

The tricky part is that even if you didn’t approve the decision, the business may still be legally bound by it, depending on the circumstances (including your business structure, what authority your partner had, and what the other party reasonably believed). That’s why it’s important to step in early, understand what authority your partner actually has, and take practical steps to protect your business.

Below, we’ll walk you through some of the most effective legal and practical steps for Australian small businesses when a co-owner (or co-director) is acting unilaterally. This article is general information only and isn’t a substitute for legal advice.

Why Your Partner Might Be Able To Act Without You (Even If It Feels Wrong)

Before you confront your partner or try to “undo” decisions, it helps to understand what gives them power to act in the first place. In many small businesses, partners can have authority to make decisions - sometimes more than you realise - especially when things haven’t been documented properly.

Step 1: Identify Your Business Structure

The legal position is different depending on whether you’re operating as:

• A partnership (common for two people operating together under a simple arrangement)
• A company (where you’re likely directors and shareholders)
• A trust structure (where a trustee controls decisions)

This matters because decision-making authority flows from different legal sources. For example:

• In a partnership, each partner may have authority to bind the partnership in the “usual” course of the partnership’s business, but there are limits and it depends on the facts.
• In a company, directors manage the company’s business, and decisions may be made by the board (directors) or by shareholders depending on what kind of decision it is.

Step 2: Look At The Documents That Control Decision-Making

If you’re in a company, your key “rules” usually come from:

• Your Company Constitution (or replaceable rules if you don’t have a constitution)
• Your Shareholders Agreement (if you have one)
• Board resolutions and shareholder resolutions
• Bank account authorities and delegated signing powers

If you’re in a partnership, your main “rule book” should be your partnership agreement. If you don’t have one, you may be relying on default partnership laws and informal understandings - which is where things can get messy quickly.

Step 3: Understand “Actual Authority” Vs “Apparent Authority”

Even if you never gave your partner permission, a third party (like a supplier) may assume your partner has authority to act if:

• they’ve acted as a decision-maker historically, and
• the business has allowed them to hold themselves out as having that power.

This is why “we didn’t agree internally” doesn’t always get you out of a contract externally. Often, you need to manage both:

• internal governance (how decisions are made between you and your partner), and
• external risk (what the business is exposed to with customers, suppliers, lenders and regulators).

Immediate Practical Steps To Stop Unauthorised Decisions (Without Blowing Up The Business)

If you’re concerned your business partner is making decisions without you and the situation is escalating, you’ll usually want to act quickly - but carefully. The goal is to stop further damage while keeping your options open.

1. Get Clear On What Has Actually Happened

Start by gathering facts. It’s hard to resolve a dispute if it’s based on assumptions or partial information.

In practical terms, that can mean:

• reviewing bank transactions and accounting records
• pulling copies of signed contracts and quotes
• checking emails, purchase orders and invoices
• listing decisions you believe were made without approval (with dates and evidence)

Keep it professional and document-focused. If this escalates to a formal dispute later, a clean timeline is extremely useful.

2. Check Signing Authorities And Access Controls

Many “unilateral decisions” happen because the partner has practical control, such as:

• sole access to banking or accounting platforms
• authority to sign contracts without countersignature
• admin access to online tools (domains, Xero, Shopify, payment gateways)

Where appropriate, consider tightening controls, such as:

• updating bank account signatories so two approvals are required
• requiring dual authorisation for payments above a threshold
• changing admin access to shared or role-based permissions

Be careful: in some businesses, abruptly cutting access can escalate conflict or create other legal and operational issues (for example, employment or director duties, or disruption to customers). If you’re concerned about misconduct or misuse of funds, it’s a good idea to get legal advice on the safest way to do this.

3. Put Your Concerns In Writing (Calmly And Clearly)

A direct conversation is often necessary, but you should also follow up in writing. A simple email can:

• clarify what decisions require joint approval
• create a written record of your position
• set a clear expectation for decision-making going forward

You don’t need to threaten legal action. Often, a calm message like “we need to agree on contracts over $X before signing” is enough to reset boundaries - especially if the behaviour was more “rushed” than malicious.

4. Consider A Short-Term Agreement While You Sort Things Out

If you’re not ready to rewrite your entire structure, you might agree on interim rules (even for 30–60 days), such as:

• no new contracts without both approvals
• no new hires or role changes without approval
• spending limits without written consent

This can buy you time to get proper documents in place.

Legal Levers You Can Use If Your Partner Won’t Stop

If your partner refuses to cooperate, keeps making decisions, or you suspect they’re acting against the business’s interests, it’s time to think more formally about your options.

1. Use The Governance Mechanisms In Your Company Documents

If you run a company, the next step is often to rely on formal decision-making processes, such as:

• calling a directors’ meeting
• passing directors’ resolutions
• passing shareholder resolutions for key matters

This is especially important if you need to formally record that certain decisions are not approved, or that certain approvals are now required.

In many cases, a well-drafted constitution and shareholders agreement reduce this risk significantly because they set out who can do what, and when both owners must agree.

2. Look For “Reserved Matters” (Or Create Them)

Many co-owned businesses create a list of “reserved matters” - decisions that require both owners to agree before they can be implemented.

Reserved matters commonly include:

• entering or terminating major contracts
• spending above a certain amount
• taking on debt or providing guarantees
• issuing shares or changing ownership
• hiring senior staff or changing pay structures
• selling business assets or intellectual property

If your current documents don’t include reserved matters, it may be time to update them (and this is usually far easier to do sooner rather than later).

3. If You’re In A Partnership, Check Whether Your Partner Has Bound The Business

Partnerships can be particularly risky because partners may be able to bind the partnership to contracts made in the ordinary course of the partnership’s business - but the outcome depends on the contract, the circumstances, and what the other party knew or should have known.

If your partner has signed agreements without you, you’ll want to assess:

• was it within the scope of the partnership’s usual activities?
• did the third party have reason to believe your partner had authority?
• has the partnership already received a benefit under the contract?

These situations can be highly fact-specific. The key is acting quickly to reduce ongoing exposure and ensure the business is not signing up to more commitments without proper approval.

4. Consider Whether The Partner Is Breaching Duties (Company Context)

Where you’re co-directors, the law expects directors to act in the best interests of the company and for proper purposes. If your partner is acting for personal gain, hiding information, or exposing the company to unreasonable risk, you may need advice on potential breaches and remedies.

This is also where early documentation matters. If the dispute turns into a formal process, you’ll want a clear record of:

• what decisions were made
• how you objected (and when)
• what the impact on the business has been

How To Prevent This From Happening Again (The Documents That Actually Help)

Even if you resolve the immediate conflict, the bigger issue is usually that your business doesn’t have enough structure around decision-making.

Putting the right legal documents in place can feel like “admin”, but it’s one of the most practical ways to protect the value of what you’re building.

1. Shareholders Agreement (For Companies)

A Shareholders Agreement is one of the most effective tools for preventing disputes and managing them when they happen.

It can cover:

• who can make which decisions (and when unanimous approval is required)
• reserved matters
• roles and responsibilities
• what happens if one person wants to exit
• deadlock procedures (what you do when you can’t agree)

2. Company Constitution (Or Updated Constitution)

Your Company Constitution sets out governance rules for the company. While it’s not always as detailed as a shareholders agreement, it can still play a key role in how meetings, voting and director powers operate.

If your business has grown or changed since you started, it may be time to review whether your constitution still fits how you actually run the business day-to-day.

3. Authority Delegations And Signing Rules

A lot of business partner conflict comes down to unclear authority, not just “bad behaviour”. You can reduce risk by setting clear rules like:

• who can sign contracts and up to what value
• when a second signature is required
• what approvals are needed for spending, hiring, pricing changes or refunds

These can be built into your governance documents, internal policies, or even a formal letter of authority if you need to define what one person can do on behalf of the business in a specific context.

4. Terms With Customers And Suppliers (To Reduce The Fallout)

If your partner has been negotiating with customers or suppliers without you, your risk depends heavily on what your contracts say.

Strong customer and supplier terms can help you manage:

• scope creep (work being promised beyond what you can deliver)
• pricing disputes
• refund and cancellation issues
• liability exposure when something goes wrong

This also ties into ensuring your business is compliant with the Australian Consumer Law, especially around refunds, representations and guarantees.

When It’s Time To Talk About Exits, Buyouts Or Deadlocks

Sometimes the issue isn’t a one-off decision. It’s a deeper breakdown in trust.

If you can’t realistically run the business together anymore, you may need to consider an exit pathway - ideally one that protects the business, your customers, and the value you’ve both created.

Common Options Small Businesses Consider

• Buyout: one partner buys the other out (often with a payment plan)
• Sale of the business: you both sell and move on
• Split of operations: less common, but sometimes possible if the business can be divided
• Formal dispute resolution / mediation: a structured negotiation process to reach agreement

Where a business partner dispute is heading toward an exit, you’ll want to be especially careful about:

• how you value the business
• who owns key assets and intellectual property
• what happens to customers, contracts, and employees
• restraints (non-solicitation / non-compete) and confidentiality

Deadlock Clauses Matter More Than You Think

In 50/50 businesses, “deadlock” is one of the biggest practical risks. Without a mechanism for resolving deadlock, your business can get stuck - unable to make decisions, raise funds, hire, or even pay suppliers smoothly.

Good governance documents typically include a deadlock process so you don’t have to reinvent the wheel in a crisis.

If you’re already in a deadlock, it’s still possible to negotiate a pathway forward, but the sooner you get advice, the more options you usually have.

Key Takeaways

• If your business partner is making decisions without you, start by checking your business structure and the documents that give authority (constitution, shareholders agreement, partnership agreement, bank authorities).
• Move quickly to document what has happened, tighten practical controls (like banking approvals), and communicate expectations in writing.
• In a company, formal governance steps (meetings, resolutions, reserved matters) can help stop unilateral decisions and create a clear record.
• Strong legal documents - especially a Shareholders Agreement and a Company Constitution - are often the best long-term prevention strategy.
• If trust has broken down, you may need to plan for a buyout, sale, or another exit pathway, ideally before the dispute escalates further.

If you’d like help reviewing your options or putting the right decision-making rules in place for your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.