Partnership Disputes

Commercial Litigation Attorneys Assisting Entities in the Chicago Area

Partnerships are one of the oldest forms of business and have certain advantages. However, when partnership disputes arise, talent may be diverted towards resolving the dispute, rather than running the business. Conflicts over misappropriation of business opportunities, embezzlement, fraud, or omissions in the partnership agreement can jeopardize an entity. Any dispute, whether between just two partners or all the partners in a large business, should be handled efficiently. At the Voelker Litigation Group, our commercial litigation lawyers can help clients in Chicago and other Cook County areas try to resolve their differences through informal methods of alternative dispute resolution. We can also take a case to trial when necessary.

Seeking to Resolve a Conflict between Partners

In Illinois, the Uniform Partnership Act governs partnerships. General partnerships are created whenever two or more people agree to do business together for profit. The partnership is a separate entity from the partners.

There need not be a written agreement to form the partnership, although the lack of a well-drafted agreement causes many disputes between partners. There are no formal requirements to create the partnership, although it must comply with various business laws. The partners typically share in the profits as well as the risks of liability and losses, but the partnership can be limited such that a partner is not personally liable for business losses.

Each partner owes the others fiduciary duties of loyalty and care, and good faith and fair dealing. This means that a partner must work in the interests of the partnership rather than his or her own personal interests. The partnership agreement can detail goals and procedures, occasionally even superseding statutory requirements about partnership functions, but it cannot abrogate a partner's legal duties of good faith and loyalty. Once a partnership is winding up, however, the partner's duty of care is limited to refraining from grossly negligent or reckless or intentional misconduct, or knowingly breaking the law.

Many partnership disputes arise because one partner violates his or her duties to the partnership or the business. A partnership agreement can specify specific types of acts that do not violate these duties, as long as they are not "manifestly unreasonable." What is unreasonable, however, may hinge on a court's interpretation.

Under Sec. 1001, a partner can directly sue another partner or the partnership for legal or equitable relief to enforce his or her rights and to protect his or her interests. This includes rights based on a partnership agreement, based on the law, or independent of the partnership relationship. The partner who is suing must plead and prove an actual or threatened harm that is not solely the result of an injury suffered by the separate entity of the limited partnership.

Many disputes may be resolved without dissolving the partnership. However, in some cases, the dissociation of a partner may be necessary. Under the Uniform Partnership Act, a partner can only dissociate before the termination of the limited partnership under certain specified circumstances. These circumstances include giving notice of an express will to withdraw, expulsion pursuant to the partnership agreement or unanimous consent of other partners because it is unlawful to continue with the withdrawing limited partner, and a variety of other situations.

Seek Legal Guidance in Chicago for a Business Dispute

Often, it is better for a business to avoid prolonged litigation. However, there are cases in which it may be critical to go to trial. At the Voelker Litigation Group, our Chicago attorneys are experienced negotiators, but we can take a business dispute to trial when necessary. Call us at 312-870-5430 or contact us via our online form. We represent clients in Cook County cities such as Glencoe, Palatine, and Skokie, as well as Kane County communities like Elgin. The Voelker Litigation Group also provides advocacy in other states, including clients in Florida, California, and Wisconsin.

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