Brad Nakase, Attorney
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It was a bright and sunny Friday morning. You wander into your local Starbucks for a cup of heady, aromatic coffee. As you stand perusing the menu, you feel a slight tap on your shoulder. Turning around, you are met with the cheery face of your old college mate, Chad. You haven’t seen him in ages, ever since you were both bright eyed, mischievous college students. Conversation ebbs and flows and the fire of past friendship rekindles. Chad tells you all about his new tech startup, and in an unforeseeable twist of fate, you and cheery Chad become business partners. It was just like the olden days, however, this time instead of grueling over textbooks, you and Chad are side by side, discussing business plans and putting together budgets. But before you know it, the honeymoon period is over and your relationship with Chad takes a turn for the worst. Like an old married couple, you begin to quarrel over every little thing. As the relationship begins to sour, you start to wonder if the business partnership was all one big mistake. Now you’re searching for a business partnership lawyer to resolve the dispute.
Does Chad remind you of your own business partner? If this short story struck a chord (or a nerve) you might just be in need of a partnership dispute lawyer. A partnership dispute lawyer isn’t someone you run to only when things go downhill, rather having one from the beginning can save you lots of trouble. Not only can a partnership dispute lawyer help you cut down on the number of disagreements you have with your partner, but they can also assist you with filling out necessary documents, choosing a name for your business and managing your intellectual property. Most importantly, they can help you draft a detailed partnership agreement that will serve as a business owner’s manual and silence partnership disputes before they even begin.
Sometimes relationships deteriorate to the point where they need to go to court. You may find yourself with no choice but sue your business partner for breaching the contract. There are usually several kinds of contracts between business partners. Some of these include:
If your business partner breaches any of the above agreements, you may have to take matters into your own hands and sue them. This would either compel your partner to follow the contract or provide you with damages for losses incurred by their breach.
For example, let’s say you and Chad signed a partnership agreement that requires both of your signatures when it comes to contracts encumbering partnership assets. Chad, however, decides to ignore this and stealthily takes out a loan behind your back. You are surprised to find that your business equipment was used as security. If this negatively affects your business, you have the right to haul Chad into court for breach of contract.
After a few months of being business partners, you discover that Chad struggles with drawing a line between his own money and that of the company. He often uses the company’s credit card to pay his electricity and phone bill. You’ve also caught him taking home a company laptop and when you confronted him he said he was giving it to his daughter to use for schoolwork. If Chad continues to take advantage of the company like that, he could drain it of cash, reduce profits, and prevent you from paying back investors. If Chad doesn’t stop treating the company as an extension of his personal bank account, a lawsuit may be on the horizon.
As if Chad’s bad behavior in the work environment isn’t enough, his actions outside of work can also have a detrimental effect on your business. If he commits a crime or files for bankruptcy, that will shed a negative light on your business. If this is the case, you should talk to a partnership dispute lawyer as soon as possible. They can help you protect your business.
Partners owe each other duties of loyalty and care, they must not act in their own interests, but they should put the partnership first. If Chad hurts you or your business by breaching these duties you may need to take him to court. Examples of breach of duty include:
Ideally, you and Chad will see eye to eye on how to manage the business. However, partners can grow apart over time. Each partner develops different ideas and wants to take the business in a different direction.
Many partnership disputes can be resolved by a quick glance to the terms of your agreement. However, if you do not have a partnership agreement, you can find yourself in a dilemma. This is why before shaking hands and officially becoming Chad’s business partner, you should have a lawyer put together a partnership agreement. This agreement will get you thinking about ways in which to resolve future disputes.
Sometimes friends don’t make good business partners and you and Chad have no choice but to part ways. This could be because the purpose of the partnership has been fulfilled or because you realized Chad is better off just being an old college mate. In other situations, it can be unfortunate circumstances like death or retirement. Nevertheless, next time you see a “Chad” in a coffee shop, don’t close the deal without first consulting a business partnership attorney.
Learn more about: Business | Corporate | Employment Law
See all articles: Business | Corporate | Employment
See all articles: Business | Corporate | Employment