Partnership Disputes

Partnership Disputes

Partnerships in Florida and elsewhere are built on mutual interest, cooperation, and a business goal of making a profit by working together versus independently. The business form is regularly used in service industries, and sometimes in manufacturing as well. Whichever is the case, the partners pool their resources and capabilities together as well as market shares. In doing so, their combined work then, ideally, produces more revenue and profit than they would have achieved working alone.

Not every Florida partnership works out nor does it sustain problem-free forever. Interests change, partners become unhappy with the current arrangements, or they find new opportunities and want to quit., which is when Panama City partnership disputes arise.

Partnership Dispute Causes

While every Florida case is different, there are common issues that tend to come up again and again in partnership disputes. These range from intentional behavior to different visions of how the partnership should operate. Again, when they can’t be resolved internally, or the partners don’t want to cooperate willingly, then the dispute turns into a legal matter. Common issues can and usually include the following:

• Misuse or a disagreed use of partnership funds
• Fraud
• Material violations of the partnership agreement terms
• Passive interference of operations
• Real property disputes
• Inability to split up assets agreeably during split-up
• Loss of partnership vision agreement

In a lot of ways, a Florida partnership is like a marriage in how it works well, and also how it can start to not work well. And, sometimes, a breakup has to become legal to be resolved fairly. However, instead of a divorce lawyer or an accident attorney for a vehicle collision, partnerships call for help from a business attorney.

Legal Options for Resolving Partnership Disputes in Panama City

There are three primary tracks for resolving matters legally, but a fourth could occur if the parties want to avoid formal processes. Generally, if the partners can come to a private agreement to resolve their dispute, they can effectively renegotiate their partnership agreement and move on. However, many times a partnership dispute is settled with an amendment and instead needs a legal third party involved. In these instances, the three remaining options are then used:

• Mediation
• Arbitration
• Trial

Mediation can be binding or non-binding. The former is more effective, but in both cases, the path avoids trial, tends to be far less expensive, and allows the parties to work out their issues with a third party moving them towards agreements. A professional mediator helps the parties lay out their issues clearly, moves and negotiates all sides to an agreement and, if they do agree, then helps the parties create a new binding agreement or dissolution everyone finds acceptable. The only difference is that in binding mediation the parties can’t go to court later on for something different or ignore the mediation agreement.

Arbitration in the case of partnership disputes is as effective as a trial but avoids a jury and judge and instead uses an arbitrator for a lower-cost judgment in a case. Both sides make their argument, but arbitration tends to work faster, allows less evidence, and costs less. Arbitration, however, is binding and can’t be easily reversed after the fact. While the arbitrator acts more like a judge than a mediator, the arbitrator can “push” the parties to an agreement before forcing a decision.

A trial is the traditional lawsuit approach. Based on evidence presented and collected in discovery, parties motion the court for what’s allowed, and then they go to trial in front of a judge and jury if not waived. Then, the decision is up to the court. A partner could lose everything in a trial, so it is high risk. Most times, lawsuits tend to be settled before trial if loss is very much a possibility.

Florida’s Unique Right to Accounting

As a state, Florida has an interesting law that works in favor of partners needing information being withheld by another in the same agreement. Dubbed, “right to an accounting,” this law is particularly effective in forcing settlement of claims, especially when funds are owed to other partners. It’s not a carte blanc law, but the rule does affect many partnership types, allowing an independent review to confirm fraud was not present. Utilizing a third-party accounting service, the partners are all provided a clear view of their entity’s financial status and transactions, clearly providing an objective view of its finances.

Dissolution and Break-Up

In some cases, partnerships cannot be reconciled, and a separation is needed. The partnership agreement and its responsibilities are dissolved, and the parties go their separate ways. However, dissolution can be hard to complete if the parties are fighting over how to split up the partnership’s shared assets. This is often the case in a one-sided affair where one partner has a larger share than the others. A formal dissolution applies a third party review and court decision of how to settle the matter, similar to a court divorce proceeding. Debts are paid, liabilities are resolved and assets are sold to be financially split if necessary. Then, formal legal steps are taken to eliminate the legal entity of the partnership.

Resolve Partnerships With a Panama City Business Lawyer

Working on a Panama City, Florida partnership dispute with an advocate like the Morgan Law Group protecting one’s rights is always a smart idea. They act as your “personal injury attorney” in a partnership contract. Your business entity may not continue, but your interests don’t need to be lost in the process. Don’t go into a dispute blindly; use protection from the Morgan Law Group to hold onto what you worked so hard to build. Remember, a partnership is a two-way street, not you giving up the entire road.