Although people rarely enter into a business relationship expecting a conflict, it is extremely common for partnership disputes to arise when business owners disagree on fundamental issues relating to a business or suspect illegal activity. Partnership disputes are among the most common type of business dispute. A partnership dispute can be extremely disruptive to a business. Partnership disputes can be very costly and can even cause a business to fail.
Partnership disputes can be complex and may result from disagreements regarding the authority of partners or the goals, objectives and direction of the business. Other partnership disputes result from one partner not properly executing his duties or breaching his partnership fiduciary duties. Of course, financial obligations and disputes can be a primary catalyst for partnership disputes as well. Some of the most common types of partnership disputes stem from: misappropriation of assets or business opportunity; fraud; breach of contract, breach of fiduciary duty, violation of non-compete; violation of non-solicitation; misuse of trade secrets, minority owner rights, among others. These are among the various partnership disputes that our Chicago business litigation attorneys encounter.
As an added layer of complexity, a partnership dispute can involve general partner, limited partners, or some combination of the two.
Our business litigation attorneys understand that partnership disputes can affect the personal and financial wellbeing of our clients, as well as affecting personal friendships and professional ties. Our law firm stands ready to address partnership disputes efficiently and effectively, so that whenever possible, our clients can return to “business as usual.”
Avoiding Partnership Disputes
Although there is no clear-cut way to avoid a partnership dispute, having a well drafted partnership agreement can prove essential in avoiding potential partnership disputes. Starting a business without a signed partnership and/or operating agreement can prove fatal for the partnership and the business. The agreement should include specific details regarding the business’s activities and objectives, and the role of each partner, including but not limited to:
Duties and responsibilities for each partner;
Specific allocation of profits and losses for each partner involved;
Goals and objectives of the partnership;
Restrictions on the partners; and
Specific instructions regarding the termination and dissolution of the business partnership.
The written business contract between business partners should be the first legal instrument that a client considers when attempting to resolve a partnership dispute. A written legal agreement, such as partnership agreement or an operating agreement, will often contain contractual provisions to direct how to business is to address a particular issue and the available remedies to resolve the dispute, whether it be through litigation, mediation, or arbitration.
Resolving Partnership Disputes
When a partnership dispute does arise, it is important to contact an experienced business litigation attorney as soon as possible. Our Chicago business litigation attorneys are available to consult and review partnership documentation to provide advice regarding options to resolve a partnership dispute.
A partnership is established when two or more individuals agree to carry on any business activity as co-owners. The most important factor to determine whether a partnership has been established is if the individuals agreed to share in the profits and losses of the business. In Illinois, the Revised Uniform Partnership Act (RUPA) provides a default set of rules that partnerships must follow. Many business partners often choose to formalize their relationship by through written partnership agreements. Regardless, partners are bound by the Partnership Act and any written or oral agreements governing partnerships. Our Chicago partnership dispute attorneys understand the importance of respecting these rules and can protect the interests of partners seeking to enforce them.
Depending on the circumstances and on any agreement(s) in place relating to the partnership, disputes can be resolved through litigation, arbitration, mediation, or other negotiation. Our Chicago business litigation attorneys always attempt to find the best resolution for our clients. We believe that an agreeable resolution reached by negotiation is usually the best option for both parties, but we understand that oftentimes negotiation is not an option. That is why we are ready to advocate on behalf of our clients in court or in an alternative dispute forum, such as arbitration.
Contact Our Chicago Partnership Dispute Attorneys
If you are having a partnership dispute or believe that you may become involved in a partnership lawsuit, please contact our Chicago law firm to inquire about your dispute at 312-789-5676.