Can My Business Partner Sue Me?

Can My Business Partner Sue Me?

Can My Business Partner Sue Me?

Entering a business partnership can be formed either intentionally or just as two parties start doing business together, meaning that there is not a partnership agreement between them. Even if there is not a partnership agreement, business partners are still subject to the state laws surrounding the matter. This is why it is important to seek a legal expert’s advice if you have a dispute within your partnership.

Partnership Agreements

While it is not required to have a partnership agreement, it is extremely advisable. This legal contract lays out everything about a partnership, including responsibilities, shares, management and general guidelines. They also instruct how disputes should be handled. Partnership agreements will often include a section mandating that partners participate in some sort of dispute resolution to resolve legal disputes. This can include arbitration or mediation. If a partnership does have, say, an arbitration clause, any legal disputes must be resolved through arbitration and outside the courts.

Revised Uniform Partnership Act (RUPA)

If a partnership agreement is not in place, the Revised Uniform Partnership Act (RUPA) will dictate not only how you and your partner do business and share earnings, but also how you and your partner should proceed if a legal dispute arises. RUPA functions as a blanket guideline, designed to fit any business, but may not fit the more specific needs of your partnership. RUPA empowers partners to initiate legal action against other partners and/or the partnership in order to defend their rights under the partnership agreement, such as the profits they are owed or the ability to leave the partnership

As with any form of legal action, your partner will only have a certain window of time to bring a case against you. If your partner, for instance, intends to sue you for violation of the established partnership agreement, they will have four years from the date of the alleged violation to do so.

Defense against Partner Lawsuits

Lawsuits brought by your business partner can be extremely stressful and result in damages of different kinds. As a result, having an experienced litigation law firm on your side to protect and defend you against such claims is vital. Hiring a lawyer can save you money and time in the long run.

The best way to avoid a partner lawsuit is to be proactive and prepared. Properly discuss and develop an agreement between you and your partner.  Hiring a lawyer to write up this agreement will make the entire process much smoother.


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