Hutchings Law Group

Partnership Disputes

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Partnership Disputes

People rarely enter a business partnership with the expectation of ongoing conflict. Unfortunately, many business owners come to disagree with their partner(s) on fundamental issues governing the direction and manner of operating the business. Partnership disputes typically arise over the use of business resources, a failure to clearly delineate authority, or a failure to fairly distribute workloads. To avoid this type of conflict, the best practice is to include a clear description of rights and duties, a mechanism for how partners resolve disputes, and the steps required for buy-out or dissolution. We can assist with the creation and interpretation of governing documents and develop a plan to protect and advance your rights. Depending on the situation and the wishes of the partners, this may include developing a strategy to help partners continue working together, or it may include crafting a way for the partners to separate.

In some cases, the dispute may arise because of a breach of fiduciary duty. The fiduciary duties that a partner owes to a partnership include the duties of loyalty, care, and disclosure. The duty of loyalty requires partners to place partnership interests above personal interests. The duty of care requires partners to avoid gross misconduct in the management and operation of the business affairs. The duty of disclosure requires partners to practice full transparency with each other regarding finances, dealings, books and records and other important aspects of the business operation. Partnership disputes typically arise from misappropriation of company funds or some other gross misconduct like self-dealing.

The nature and scope of these duties and the procedural formalities associated with their enforcement can be nuanced. It is important to consult with an attorney if you believe there has been a breach of fiduciary duty within your partnership. If you have questions about your partnership, contact us today and allow us to explain your legal options.

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