Business partnerships are like a marriage. It’s cliché, but it’s true. Disputes are inevitable, and wise partners will anticipate and prepare for them. The best way to handle disputes is to set clear expectations from the beginning and have a clear agreement on how to handle the disputes.
Under New York Law, business partners have fiduciary duties and obligations. These fiduciary duties not only touch the business, but also “outside” opportunities that may be only tangentially related to the business. It is important to understand your rights and obligations in relation to your business associates and partners.
A partnership dispute can result in lost profits and implosion of the business. However, careful planning can prevent such disastrous outcomes. If you’re forming a partnership, or facing a dispute, contact us today to resolve the issue. Don’t let a dispute threaten your entire business and all your investment into the business.
The best way to avoid a partnership dispute is to begin with a good agreement from the beginning. Even close friends and family members should begin with a written partnership agreement. A partnership agreement is not a sign of distrust; it’s a tool for clear communication between partners. Like any relationship, communication is critical. Partners need have a clear understanding of how to treat the assets, opportunities, and debts related to the business.
Our New York City commercial litigation attorneys can clearly explain in plain language the rights and duties associated with the partnership before a dispute arises.
Business Partnership Disputes
As fiduciaries, business partners are held to a higher level of responsibility to each other and to the business.
Business disputes can resemble a tug of war
Partnership disputes can occur in many ways, but common sources of tension include:
- Misappropriating assets belonging to the company
- Diverting assets belonging to the company; and
- Misappropriating “business opportunities” belonging to the company
Partnership Dispute Resolution
We have experience resolving partnership disputes without going to court. When emotions are running high, it is hard to think objectively and communicate effectively. It is the attorney’s job to represent your interests and effectively communicate to the other side.
Our partnership dispute attorneys know that sour grapes between partners are a time bomb waiting to re-appear and destroy the business. Resolving a dispute involves more than just settling past scores, it’s about setting you up for future success down the road.
When it appears that partners cannot reconcile, our attorneys can help dissolve the partnership in a manner that’s fair to everyone.
Voluntary dissolution. If both of the partners want to dissolve the partnership, we can facilitate the dissolution. There will be issues of how to handle on-going business projects, how to divide assets and who is responsible for debt. Our attorneys
Involuntary dissolution. If only one partner wants to dissolve the partnership, he or she can file suit and the court will order the dissolution of the partnership and a division of the assets and liabilities. Depending on the nature of the dispute, the court may appoint a receiver to manage the business until the dissolution can be settled.
In any case, we are waiting for you phone call. We are here to help.