A partnership can be broadly defined as an association of two or more people who are co-owners of a business for profit. Although this is a very flexible form of business, the law provides that business partners have fiduciary duties and obligations to one another related to the business and any outside opportunities. Partnership disputes arise frequently. They can lead to lost profits, wasted investment, and ruined business relationships. In order to make sure disputes are handled well when they arise, business partners in New York and elsewhere can seek the assistance of the litigation attorneys at Klapper & Fass.Protecting Your Interests as a Partner
In New York, a partnership may be "general" or "limited." Limited partnerships, which are governed by NYPL, Article 8-A, the Revised Limited Partnership Act, designate one partner as the general partner and the others as limited partners. The liability of the limited partners is limited, whereas the general partner's liability is not. In general partnerships, all partners have an equal right to manage the business and can be held personally liable for the debts and obligations of the business.
No matter how closely business partners' goals align and how well intentioned they are, it is wise to create a clearly written partnership agreement at the outset. This allows each partner to understand how to appropriately treat the shared business assets and debts, as well as any opportunities that arise. Partnership disputes can arise for many different reasons. Some of the more serious scenarios include partner misappropriation of assets, partner misappropriation of the business' opportunities, and diverting assets that belong to the business.
When evaluating a partnership dispute, the first consideration will be whether there is a written partnership agreement in place. Written agreements are not required, but if they exist, the terms of the agreement will likely control the dispute, including whether a partner must withdraw from the partnership and how to dissolve the partnership. In some cases, the agreement includes an arbitration agreement. This means that a partner will need to serve a notice of intent to arbitrate and follow any steps specified in the agreement.
Under New York's Partnership Law, each partner has the right to manage and be involved in a partnership and may see the books and records. A partner can withdraw at any time and is entitled to be bought out based on financial accounting. A partner who is withdrawing has the right to sue the other partners to get an accounting and money for his or her stake in the business. However, these rights can be modified by a written agreement.
In some cases, partnership disputes are resolved by an agreement to voluntarily dissolve the partnership because the partners cannot reconcile their views. As part of the negotiations, the partners' attorneys can discuss how to divide the assets and how to conclude ongoing business projects. Sometimes partners are unable to agree on whether to dissolve a partnership. When that happens, one partner may file suit to dissolve it. The court has the authority to order its dissolution and a division of assets and debts. In some cases, it may be necessary to appoint a receiver.Discuss a Business Dispute with a New York Attorney
Business disputes can quickly become complicated. The New York lawyers at Klapper & Fass can represent partners experiencing conflicts, and we can also help them dissolve a partnership as necessary. From our offices in Manhattan and White Plains, we serve all five boroughs of New York City. Klapper & Fass also provides legal guidance in Westchester, Nassau, Rockland, Orange, Suffolk, and Dutchess Counties, as well as in states such as California and Illinois. Contact our office at 914.287.6466 or via our online form to set up an appointment.