Handling Partnership Disputes in Florida

In business your partners are often your friends, or at least people that you have a somewhat amicable relationship with. Hopefully, that carries on throughout the partnership. But sometimes it doesn’t. Whether it’s the business that infects the personal relationship, or the other way around, sometimes things go bad in business partnerships. How do you handle these kinds of problems?

Written Partnership Agreements

It is always best to have a written partnership agreement that sets out the problems that can happen in a partnership. Some common situations that may be addressed are:

• What happens when a partner isn’t “carrying the load,” by doing the work that the partnership requires of them?
• Under what circumstances will a partner be able to loan money to the partnership, and what happens if the money isn’t paid back?
• What happens if a partner is incapacitated, or otherwise not able to do any work at all?
• What happens if a partner’s interest in the partnership is passed on, for example, by a divorce, a bankruptcy, or by inheritance after death?

Unfortunately, Florida law doesn’t require that a partnership have a written agreement, which means that many times, these situations and others like it are not addressed.

Dissolving the Partnership

Sometimes, partnership disputes can be resolved through dissolution of the partnership. That may not be ideal, but if both parties can agree, it is possible that both can carry on whatever work they want to do separately, with the business continuing to operate with different partners.

In a dissolution, partners may want to “cash out”—that is, to be paid for giving up their share of the partnership, especially if the partnership was profitable. Partners may also want to be repaid for any loans or money that was given to the partnership. If the partnership doesn’t have the funds to buy out the partner, the partner may have to be paid back over time, assuming the partnership can continue to operate profitably.

Going to Court

Of course, instead of dissolving, you may end up in court over your dispute. The problem with that is that any partner can ask the court to dissolve the partnership in the lawsuit, and this often happens. Additionally, courts sometimes will simply split everything evenly between partners (assuming there is no other written agreement), which may not be exactly what you want.

Additionally, asking for court intervention may also involve an accounting. This is where a partner, unsure of what he or she is entitled to, or wanting to ensure that partnership assets are not being wasted, asks for a full accounting of the partnership’s financials. This can be invasive, and costly.

In the end, it is always best to try to resolve partnership disputes amongst yourselves, with legal help (possibly with mediation), but outside of going to court.

Call the West Palm Beach commercial litigation lawyers at Pike & Lustig to help if you have a partnership or business problem.