Partnership Disputes And Lawsuits

The Uniform Partnership Act of 1994, which is included in the California Corporations Code, governs partnership disputes in California. When looking at prospective actions between partners or between a partner and the partnership, business litigation attorneys that handle partnership litigation should start there. Partnership law in California specifies what a partner may and may not do in the event of a partnership dispute.

Potential Partnership Lawsuits

What may a partner do against his or her partners, or against the partnership as a whole? A partner may

(1) sue to enforce his or her partnership rights under the written partnership agreement,

(2) sue to enforce his or her rights under California law,

(3) sue to enforce rights of dissociation,

(4) sue to compel the dissolution and winding up of the partnership, and

(5) sue to enforce or protect a partner’s rights or interests, including those arising independently of the partnership relationship.

Lawsuits To Enforce The Written Partnership Agreement

Business litigation attorneys that handle partnership cases recognize that the best way to prepare for a partnership lawsuit is to develop and agree on a comprehensive partnership agreement before you start working together. The partnership agree­ ment’s objective is not to be used when everyone is pleased and working well together. The partnership agreement is meant to foresee what will happen if the parties cannot agree. If the parties have a well thought out partnership agreement-drafted andreviewed by an experienced partnership attorney, they will have a much better chance of avoiding partnership litigation in the first place. And, even assuming that a future dispute devolves into business litigation between them, any future disputes will be more easily solved if procedures are set in place in the partnership agreement.

Lawsuits To Enforce Rights Under California Law

Partnership cases under California law are frequently founded on rights outlined in the formal partnership agreement. Even though the partners did not sign into a written partnership agreement, California law gives them certain rights. Furthermore, the written agreement may not supersede such rights.

The most typical partnership lawsuits that arise in partnerships that do not have a documented partnership agreement are likely to be for violations of fiduciary obligations and litigation to force access to the partnership’s books and records. A typical first reaction in partner disagreements is for one partner to prevent the other partner from studying the partnership’s books and records. Business litigation lawyers that specialize in partnership cases understand that this is the incorrect initial answer. The right of partners to see the company’s books and records is entrenched in California law. Partners who refuse to allow another partner access to those records not only risk a court order compelling them to open up the books but will also be ordered to pay back the partner who is forced to hire an attorney to enforce this right.

Lawsuits To Enforce Dissociation

The Uniform Partnership Act of California establishes a procedure for assessing the buyout of a dissociating partner. If the partnership refuses to follow this method, the dissociating partner might initiate an action to compel it.

Lawsuits To Compel Dissolution Of The Partnership

A partnership may be compelled to dissolve for a variety of rea­ sons. Certain events specified in the written partnership agreement may result in dissolution. The majority of the partners may decide to dissolve the partnership. An occurrence or a legisla­ tion may make the partnership’s operation illegal or may unfairly frustrate the partnership’s economic objective. When any of the reasons listed in the Uniform Partnership Act occurs, but a majority of the partners do not agree to dissolve, a partner may bring a lawsuit to have the court dissolve the partnership.

The most crucial thing for a partner facing a partner lawsuit is to employ an experienced business litigation lawyer who specializes in partnership cases and is familiar with the applicable partnership legislation. The skilled trial attorney can identify the concerns and advise you on the best legal path to take.