California Partnership Dispute Attorney Serving Los Angeles, Orange County, San Diego, Riverside, Palm Springs, San Bernardino, Palo Alto, and San Jose
Finding a trustworthy partnership dispute attorney is one of the best investments business owners can make. Even before conflicts arise, a partnership dispute attorney can help a new business by filing the necessary documents with the government, preparing the operating or partnership agreement, and setting out expectations for each party. Although most conflicts can be sorted out without incident, there is always a chance that even the most amicable partners will not be able to reach a resolution. Having an experienced business attorney in your corner for partnership disputes can prove to be your greatest asset.
What is a Partnership?
Interestingly, there is no formal agreement required to create a general partnership. In fact, all that is required to form a partnership is two or more individuals carrying on a business for profit and who share the profits derived from that business. There is no natural person required to form a partnership; two separate business entities may be considered individuals who form a general partnership. When a general partnership is sued, the partners may be held personally liable on the judgment arising therefrom. Further, when a general partnership enters into a financing arrangement, the partners may be held personally liable for the debts of the general partnership.
There are other types of partnerships which do require a formal agreement. The formal agreements are required to form Limited Liability Partnerships (LLP) and Limited Limited Liability Partnerships (LLLP’s). The formal agreements are required because these types of partnerships limit the individual partner’s liabilities for the obligations of the partnership. As such, both require a formal designation and require a filing with the Secretary of State in the state of the partnership formation. Further, in LLLP’s there are designations as “limited partners” and/or “general partners” which may affect a partner’s liability for the partnership obligations.
Whether you are a partner in a partnership and/or whether you may be held personally liable for the debts of the partnership is a confusing endeavor. In order to clear up any questions you may have about your partnership status, it would be prudent to contact an experienced business attorney in California.
Common Causes of Partnership Disputes
Breach of Fiduciary Duty
Listed as the most common form of partnership dispute, financial disputes between partners can greatly affect a business. Partners maintain a fiduciary duty to the business, the stakeholders, and each other to appropriately manage assets and act in the partnership’s best interest. Misappropriating company funds, misusing business assets for personal use, or mishandling liabilities can be considered breaches of fiduciary duty. Because these financial rights and obligations of a business are essential to running the business, a breach of fiduciary duty can lead to partnership disputes resulting in the end of a partnership.
Breach of Contract
A partner who fails to uphold his or her end of a business partnership agreement may be liable for breach of contract. Having an enforceable partnership agreement written by an experienced business attorney who is also highly knowledgeable in breach of contract can be especially valuable in this situation.
If there is not a clearly laid out chain of command, important issues may not get resolved, either because too many partners are addressing the same issue or because nobody is addressing it at all. Even with such a document, problems can still arise when partners fail to properly adhere to the chart of authority. Nonetheless, the best solution to preventing partnership authority disputes is to establish a clear chain of command early on to prevent confusion and uncertainty about partnership responsibilities.
Partners may contribute time, expertise, money, or some combination of the three to a business. However, it can be difficult to measure one type of contribution against another. If one partner feels he or she is contributing more and that the workload is not being distributed fairly, partnership disputes may arise. Establishing clear expectations of partner contributions within the partnership agreement can help prevent conflicts over workloads.
Company Vision Disputes
The values, goals, and objectives of each partner must align with those of the business and other partners. For example, if one partner sees the business as a way to make a modest living and then sell it to a larger company, this could radically clash with a partner who wants to grow the business and eventually take it public. Partners should agree on a company vision as early as possible to avoid partnership disputes over the goals of the company.
Disagreements will inevitably arise between partners, but partners who are particularly prone to conflict may not be good long-term business partners. Contrasting personalities that were originally seen as beneficial may become hostile and detrimental to the business as time goes on. When business partners are also spouses seeking a divorce, this adds another level of complexity to partnership disputes that can best be addressed by speaking with a family law attorney.
Avoiding and Resolving Partnership Disputes
The best way to avoid partnership disputes altogether is by hiring a knowledgeable business attorney before entering into a business partnership. A business attorney can help you prepare documents that define the duties and expectations of each partner, thereby saving you from costly litigation in the future should a partnership dispute arise.
If a partnership dispute has already surfaced, contact a business attorney as soon as possible. A business attorney with experience in partnership disputes can evaluate partnership documents to find the best course of action for your needs while saving you time and money.
Contact a Partnership Dispute Attorney in California
The attorneys at Talkov Law understand the complex nature of business partnership disputes. Our team can help you address such disputes while preserving important relationships. Call (844) 4-TALKOV (825568) or contact us online for a free, 15 minute consultation to discuss your business partnership legal needs.