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Causes of partnership disputes

On Behalf of | Jan 20, 2021 | Business & Commercial Litigation

Partners in a business may, unfortunately, have serious disputes at one point or another. Although some individuals can resolve these disagreements amicably, certain issues between partners require litigation. There are some causes of action that business partners in Massachusetts and other locations should be aware of when considering litigation to solve a partnership dispute.

Breach of contract

Partners oftentimes memorialize the rights and responsibilities of partners in a partnership agreement or other similar contracts. Such an agreement governs how the partners will control the business, distribute profits and losses, and other matters. If a partner violates such a contract, they can be held legally liable for damages that result from this breach.

Breach of fiduciary duties

A fiduciary is someone who owes a duty to another due to a special relationship, and partners are often fiduciaries of one another. As a result, they often owe each other a duty of loyalty, a duty of care, a duty not to freeze a partner out of management and other responsibilities. Breach of such duties can form the basis of a valid partnership dispute.

Unjust enrichment and quantum meruit

Even if partners do not have a written contract, they can still recover damages from another partner through other causes of action. Unjust enrichment and quantum meruit often allow a court to award a partner compensation that he or she is owed for equitable reasons. It is important to speak with a business and commercial litigation attorney to see if your particular situation involves these theories of recovery.

Judicial dissolution

In some instances, courts are authorized to dissolve a partnership and liquidate its assets if partners cannot resolve their dispute. This is a major step, and partners should speak to counsel in order to determine if seeking this relief would be appropriate in their situation.