Partnership and Corporate Disputes
What Is a Partnership?
Fla. Stat. §620.8202(1)states that “the association of two or more persons to carry on as co-owners a business for profit forms a partnership, whether or not the persons intends to form a partnership.”
Formation of a partnership does not require a showing that the parties subjectively intended to create a partnership, only that they intended to do the things that constitute a partnership. Florida law provides that a partnership results from either an express or implied agreement to share profits and to carry on the business as co-owners. Rafael J. Roca, P.A. v. Lytal & Reiter, Clark, Roca, Fountain & Williams, 856 So. 2d 1 (Fla. Dist. Ct. App. 2003).
What Is a Corporation?
A corporation is a recognized separate legal entity capable of owning its own assets and managing its own business. A stockholder has certain rights in a corporation, but those rights do not include a direct interest in any corporate asset or income nor do these rights include an interest in a corporate bookkeeping account. Bair v. Bair, 214 So. 3d 750 (Fla. Dist. Ct. App. 2017).
What Is a Partnership Dispute?
Partnership disputes are conflicts, or issues that arise between the partners of a company or business. These disputes may be caused for different reasons, such as disagreements over:
- Profits and assets
- Business management
- Allocations or distributions
- Terms of partnership agreement
- Work imbalance
These disputes can pose a risk to the company or business in its entirety and may require negotiation, mediation or litigation to resolve. Thus, it is recommended that you seek legal counsel regarding business and partner disputes to protect your business and business relationships.
Is There Anything I Can Do to Avoid or Mitigate Partner Disputes?
Ideally, business partners should have an understanding of their partner obligations. These obligations can be outlined within a partnership agreement.
- Partnership agreement: an agreement that lays out how a business will operate under two or more people.
The agreement dictates the responsibilities of each business partner, how much each partner owns and how much profit and loss each partner may be responsible for. A partnership agreement may also outline the rules regarding the management of the business and addresses potential issues that may arise within the business ownership period.
Hiring an attorney to draft a quality partnership agreement may make a world of a difference in the management of your business. It can help clarify expectations and keep partner obligations clear and consistent. Thus, minimizing potential disputes.
- Direct negotiation
- Engage in alternative dispute resolution
Why Might a Partnership Agreement Necessary?
If you do not have a partnership agreement in place, your partnership obligations may be governed by Florida partnership law. These state laws will offer a standardized approach but will lack the customized and tailored agreement you or your business might need.
Common Elements to a Partnership Agreement:
- Business name
- Business description
- Business contact information
- Business owner contact information
- Partner ownership: how much of the business does each partner own?
- Decision making: you may want to include a process such as voting on issues or decisions for the business.
- Profits and distributions: how might the profits be allocated and to whom?
- Capital contribution: how much does each partner pay in or contribute to the business?
- Buyout agreement
- Extensions or workload sharing
Why Should I Seek Legal Counsel Regarding My Partnership Dispute?
- Draft and interpret: an attorney can draft partnership agreements and/or review and interpret existing agreements.
- Navigate dispute resolution options: an attorney can help evaluate your situation and give advice as to what resolution method may be best for you.
- If the disputing parties go separate ways, an attorney may ensure that business matters are handled appropriately and legally such as purchase and sale transactions.
- Ensure liabilities are accounted for.
- An attorney can work with other professional advisors such as accountants to ensure your financial assets and the financial elements of the business transaction are addressed and documented properly.
Please do not hesitate to contact Rak Law Firm at 407-437-0319 regarding your business or partnership dispute. Our experienced attorneys can help keep your business partnership healthy and productive for all partners.
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