A partnership dispute can have catastrophic consequences for a business. At SAC Attorneys, our San Jose partnership litigation lawyers represent individual partners and businesses throughout Silicon Valley. We have accumulated decades of combined legal experience handling partnership disputes, along with other litigation. We are efficient and effective at finding solutions, whether through mediation, another alternative dispute resolution method, or a trial. Often, partnership disputes need to be handled aggressively, but with diplomacy. It is important to choose lawyers who will help you avoid burning bridges or endangering working relationships.Partnership Disputes
Partnership disputes may involve contract disputes, fraud, management disputes, breach of fiduciary duty claims, partnership dissolution and winding up a business, removing a partner, the alleged misappropriation or misuse of funds, disputes arising from divorce or probate, and disputes related to compensation.
Partners owe each other fiduciary duties, and they owe an obligation to the partnership as well. A fiduciary duty is a duty of the highest care, and it affects not only the business but also other opportunities. A breach of a fiduciary duty usually entitles a non-breaching partner to a remedy. However, a fiduciary duty can be waived through an agreement.
There are four fiduciary duties: the duty of loyalty, the duty of care, the duty of obedience, and the duty of good faith and fair dealing. Each of these duties has a different scope, which a partnership litigation attorney in San Jose can explain. The duty of loyalty entails accounting to the partnership and holding assets, profits, or any benefits derived from the partnership as a trustee. To abide by their fiduciary duty, a partner should not compete with the partnership. This duty also requires a partner not to deal with the partnership on behalf of someone who has interests adverse to the partnership.
A partner’s duty of obedience requires a partner to act in a way that is in alignment with the partnership’s mission and purpose. Partners are supposed to oversee and take care of the business functions so that the business can operate in accordance with its mission and purpose.
Partners are supposed to exercise their rights in accordance with their obligation of good faith and fair dealing as well. They are not supposed to take undue advantage of the partnership. Unless this is permitted by agreement, no partner should enjoy greater rights than other partners. Partners are not supposed to get a secret profit.
Due to their fiduciary duties, partners are required to refrain from reckless conduct, intentional misconduct, knowing legal violations, and grossly negligent conduct. A San Jose partnership litigation attorney can help you pursue a claim based on any of these actions.Dissolution of the Partnership
Sometimes partnership disputes result in one or more of the partners leaving or wishing to withdraw. Partnerships may be totally dissolved or reworked to change the partners’ ownership or authority, and in some cases, they are continued by one or more partners after the withdrawal of a partner. The first step in dissolving a partnership is to consult any written partnership agreement that may control the business. A strong partnership agreement will address how partnership assets, if any, will be divided among the partners and how partnership debts should be divided. Agreements are not required, but it is wise for partners to create them. When there is no written agreement governing dissolution and other issues, the California Uniform Partnership Act will control the situation.
Partnership disputes can give rise to lost profits and business dissolution. One benefit of retaining an attorney to handle a partnership dispute is avoiding threats to the survival of the business. It is more expensive to try to handle a dispute once it has reached the point of trial than addressing it before then.Retain a Partnership Litigation Lawyer in the San Jose Area
If a partnership dispute is on the horizon, you should consult our experienced attorneys. At SAC Attorneys, we offer more than 70 years of combined legal experience, and we represent clients throughout Silicon Valley. Call (408) 436-0789 or contact us via our online form.