NYC Partnership Disputes Lawyers
Partners pool their finances, property, talents and other resources together in pursuit of profits. Written agreements or conduct that shows an intent to be partners can form partnerships. The relationships among partners can bring optimism — and disputes that arise from disagreements about conducting business, distrust and dishonesty.
Our NYC partnership disputes lawyers offer our legal skills, expertise and dedication for those of you caught in these types of disputes.
What Are the Types of Partnership Disputes?
Partnership disagreements involve the sharing of profits and expenses. Under Section 40.1 of the New York Partnership Law, partners are entitled to equal shares of the profits and are obligated to bear the expenses equally — unless a partnership agreement says differently. If the partners agree to divide profits differently, your share of the expenses depends on the share of the profits you agree to take.
Often, an aggrieved partner believes he or she has been excluded from management or even a say in the affairs of the venture. Partners have equal rights to manage and conduct the partnership business and affairs, according to New York Partnership Law Section 40.5. This includes whether and on what terms to enter into contracts, the types of business and clients to accept and hiring or firing of employees.
The usurpation of power or secrecy by a partner often leads to claims that the partner has breached his or her fiduciary duties. All of the partners owe each other a duty of loyalty and to act in the best interest of the partnership as a whole.
A partner’s violations of this fiduciary duty may include treating a sale or other transaction and the money from it as if it belongs solely to that partner. Some partners may use the partnership name and resources to get business solely for themselves or four their own personal interest. Another instance may include keeping secrets about partnership affairs.
In more extreme cases, a partner may be accused of fraud or embezzlement. One of our NYC partnership disputes lawyers can help you investigate and take action if you suspect one or more of the partners have stolen from the partnership or misappropriated business or opportunities. Also, we stand ready to defend accusations that may be levied against you.
What Are the Remedies in Partnership Disputes?
Our NYC partnership disputes lawyers have the know-how and experience to bring or defend claims arising out of disagreements among or misconduct involving partners.
Dissolution: The Divorce for Business Partners
One such action involves dissolving the partnership. New York Partnership Law Section 63 affords partners numerous grounds to ask a court to dissolve a partnership. A sample of these include the inability of the partnership to conduct business without losing money and willful violations of the partnership agreement or other partner misconduct that harms the venture.
Think of a dissolution as a type of divorce. Spouses who decide to end their marriage have property to divide, rights of support for themselves and the children to determine and other financial issues to resolve. When partners dissolve or divorce, the partnership goes through a winding-up process. Here, those who are owed money by the partnership get paid and the remaining property or profits are divided either equally or according to the partnership agreement.
Breach of Contract and Fraud
Dissolution represents just one of the matters often handled or litigated by our NYC partnership disputes lawyers. We also represent partners who want to bring or need to defend lawsuits for breaches of fiduciary duty and partnership agreements, conversion (the wrongful taking and deprivation of partnership property) and fraud.
As to fraud, our NYC partnership disputes lawyers encounter cases of actual fraud and constructive fraud. These types of fraud share many similar elements. Both arise out of a statement of fact that is not true and the party seeking relief was harmed by relying on the belief it was true. Unlike actual fraud, where the person making the statement must intend to deceive (that is, the speaker knows his or her statement is false), constructive fraud arises when the speaker holds a fiduciary relationship and uses it to take advantage of others in the relationship. Partners are considered fiduciaries of each other.
Looking Into the Books
A word of caution. If you’re in a partnership and suspect wrongdoing, you need to consult one of our attorneys about your recourse if you’re not ready to seek a dissolution of the partnership. So long as your partnership exists, you’re not permitted in New York to take another partner to court for fraud, breach of contract or breach of fiduciary duties. You may demand that the partners account for partnership profits and open the partnership books. Our NYC partnership disputes laywers can deliver those demands or file an appropriate action in court for these equitable remedies.
When you ask one of your NYC partnership disputes lawyers for help in a partnership dispute, we’ll need to see many documents. These include your partnership agreement, partnership tax returns or reports, any financial statements you have received from the partners, demands you have made and responses, and any documents from courts or governmental agencies about your partnership. Once you share your situation, the facts and documents, our NYC partnership disputes lawyers can guide you in either pursuing or defending claims and in resolving your disagreements.