Any recourse for partners breaking our partnership agreement?
Get Legal Help Today
Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption
Any recourse for partners breaking our partnership agreement?
My wife and I formed a partnership with another couple. According to the partnership agreement, we would receive 50% of the net profits immediately for our participation in the business (tax returns, accounting, business plan, marketing strategy, etc.). However, my wife and I would not have any ownership in the company just yet. In lieu of us putting in any capital, we would acquire ownership based on our sales – $10,000 in sales gives us 10% ownership until we reach a max of $50,000 in sales and become 50% owners. A conflict developed between all the partners and the other couple have cut us off; basically took their ball and went home. Stopped paying us our share of the net profits. What recourse do we have? Do we need to sue them in small claims court?
Asked on February 3, 2011 under Business Law, Texas
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
If someone has violated a partnership agreement or other contractual obligation to you, then your recourse would be to sue them for what they owe you. Whether you sue them in small claims or other court, and whether you hire an attorney or sue them personally, will depend on (1) how much money is at stake, and (2) how complex the case is (which touches on whether you have a clear, easily proven written agreement or not; how accessible and reliable are the financials; etc.). Note that once you institute a lawsuit, you will access to the mechanisms or tools of "discovery," such as Notices to Produce Documents, Interrogatoris, and Subpoenas, which will let you double check financial figures, salaries, distributions, etc.
IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.