You do not start a business with a partner expecting disputes. Disagreements over finances and contract obligations can strain your relationship with your business partner. If the conflict becomes serious, litigation may be necessary.
Before filing a lawsuit, understanding your legal rights can make the process easier to manage.
What to do after a partnership dispute
New York gives business partners different deadlines for filing a lawsuit, depending on the type of conflict. Before suing a business partner in New York, take these three steps to understand your options and protect your business interests:
- Review your partnership agreement: The partnership agreement will have details about major business decisions and profit divisions. If there is no written agreement, looking for bank records, emails and contracts can help you clarify your ownership rights and support your position when the dispute leads to litigation.
- Request an accounting: If you suspect your partner has misused partnership money, ask for an accounting. This can determine how partnership funds and assets were handled and what each partner owed.
- Check your legal options: Understand what type of legal claim may apply to your situation. A dispute could involve breach of contract, breach of fiduciary duty or dissolution of the partnership, depending on the facts.
New York has a special rule for disputes between business partners: While the partnership is still active, you usually cannot directly sue your partner for money. You generally must first ask the court for an accounting to determine what each partner is owed or seek judicial dissolution to end the partnership.
Building a stronger business future
Understanding partnership laws can be important in preserving your interests. When a partnership is just not working out, dissolving the business may be the viable option. Knowing the right legal steps at the right time can save you money and help you make better choices for your business.