Partnership dispute resolution and remedial action planning

¶ … Partnership Agreement

Corporate and Partnership Law

The first and foremost thing to do is to get a copy of all agreements that the partners signed. Many people refer to their co-shareholders as "partners," when in fact; they are not real partners, but rather all shareholders in a corporation, or members of an LLC. Different regulations apply for different types of business entities. So, another step is to determine what you own. A partnership does not need a written agreement. If there is an agreement, then the partners are free to determine in that agreement their rights, including how and when and on what terms a partner can obtain from a partnership.

Since there is no written partnership agreement, then any partner can withdraw at any time under Partnership Law. By withdrawing, a partner is entitled to be bought out. The first step is to get an "accounting" which is a financial snapshot. Then, the bought out partner is to get paid for his share. If your partners will not honor the agreement, or if I have no agreement, won't honor partnership and corporate law and partnership statute, then I have a right to sue the partners to get an accounting and a monetary award for your partnership interest.

Secondly, I would need to serve a "notice of intent to arbitrate" and follow the steps of the arbitration clause. However, I may have some solutions available in court, too, including an injunction in assistance of arbitration, to safeguard bank accounts, for example, from a partner making inappropriate withdrawals, or to avoid a partner from using partnership funds to pay for legal fees (Geradin, 2007). Every partner under the Corporate Law has a right to manage and be among the partnership and a right to see the records and books of the partnership. The right to manage, however, can be made by a written partnership agreement. For example, a partnership could name a committee or a manager to be the managing pillar of the partnership. I would, however, still have the right to review the partnership's records and books (Geradin, 2007).

Third step is to take a look at the shareholders agreement, if I have one. If there is any arbitration agreement, the Court will ask the parties to arbitrate their dispute, if I timely make a motion to stay the court proceedings. I would need to act promptly, however, so that there is no waiver of the right to arbitrate. Also I would make sure that the disgruntled shareholder really owns the minimum 20% of the voting stock in the corporation. There would be two choices once confronted by a shareholder lawsuit: either to fight over whether there has been oppression (looting or waste) by the majority, or elect to buy-out the shares owned by the petitioning shareholder or partner for fair value.