Business partners can have serious disagreements over various aspects of their company, such as its strategic direction or financial management. Sometimes, business partnership disputes can escalate to litigation when partners turn to the courts to resolve impasses or claims for compensation or other relief. But how do courts in Oregon handle disputes between business partners? Knowing what can happen when a business partnership dispute ends up in court can help you develop and follow a legal strategy to resolve a conflict with your partners that protects your business and financial interests.
Common Examples of Partnership Disputes
Conflicts between business partners can arise from disagreements about different management decisions. Partnership disputes can also arise from allegations that one or more partners engaged in misconduct against the other partner(s). Common examples of partnership disputes that can lead to litigation in Oregon courts include:
- Alleged breaches of fiduciary duties (e.g., self-dealing, usurpation of business opportunities, acting under a conflict of interest)
- Disagreements over distribution or retention of profits
- Conflicts over decision-making or management authority
- Disputes over the strategic direction of the business (e.g.
- Alleged breaches of the partnership agreement (e.g., failure to contribute capital, breaches of non-compete or non-solicitation agreements)
- Alleged exclusion or “freeze-out” of partners from management decisions
- Misappropriation of partnership assets
Oregon’s Partnership Law
Oregon has adopted the Revised Uniform Partnership Act (RUPA), which governs the creation, management, and dissolution of general and limited liability partnerships organized under state law. RUPA also provides default rules for operating an Oregon partnership when a business’s partners have not adopted a written partnership agreement to govern the partnership. RUPA also has provisions governing the removal or voluntary departure of a partner from a business without dissolving the entire partnership.
Business partners can override most of the rules and provisions of Oregon’s RUPA by having a signed, written partnership agreement whose terms supersede the relevant or parallel provisions of the RUPA. As a result, courts called upon to resolve Oregon partnership disputes will first look to the business’s partnership agreement for guidance, before turning to RUPA to fill in the gaps for governing rules not addressed in the partnership agreement.
How Oregon Courts Resolve Partnership Disputes
Depending on the provisions of a partnership agreement, business partners who reach an impasse or who allege misconduct by one or more other partners may have to submit their dispute to mediation or arbitration, if required by the partnership agreement. However, when a partner has the right to seek relief from a partnership dispute in court, Oregon courts may resolve a conflict among partners in various ways, depending on the nature of the dispute and the specific relief sought. Common ways that Oregon courts resolve partnership disputes include:
- Awarding financial compensation for losses caused by a partner’s misconduct that the partnership or individual partners incur
- Ordering an accounting for the partnership’s finances and operations
- Granting a partner access to the partnership’s books and records
- Ordering injunctive relief, such as barring the enforcement of an invalid amendment to the partnership agreement
- Issuing declaratory judgment, such as determining the status of an alleged partnership interest
- Ordering dissolution and wind-up of the business
Practical Steps for Partners in a Dispute
Partners facing a dispute over their business can follow certain best practices to put themselves in a better position to resolve conflicts favorably, including:
- Reviewing the partnership agreement to understand rights and obligations, along with dispute resolution procedures
- Gathering records of communications and financial transactions
- Engaging mediation to resolve a dispute, even if not required by the partnership agreement
- Consulting an experienced business litigation attorney for advice on next steps
Contact Our Firm Today for Legal Assistance
Disagreements between you and your business partners can escalate into serious legal disputes that lead to litigation. Contact Wayne A. Lamb Law today for a free, confidential consultation with an Oregon litigation attorney to discuss the details of your business partnership dispute and to learn more about your legal options for pursuing a resolution of that dispute in Oregon court.