Remedies For Partnership Disputes

I previously wrote about the rights and obligations between business partners and between partners and the partnership.  I also noted that a partnership agreement can help avoid many business disputes among partners or at least end a dispute before it becomes fullblown litigation.  But if litigation does arise, what are the available legal remedies?

First, business partners or partnerships can always bring standard legal claims such as breach of contract, fraud, defamation, or negligence.  Iowa Code 486A.405(2)(c) specifically allows legal claims involving partners or partnerships that arise independently of the partnership relationship.  Because of that, many partnership lawsuits can become complicated and involve many different claims, counterclaims, and defenses because each partner starts blaming the other partner(s) for everything that’s gone wrong or been done wrong for the past several years preceding the lawsuit.

Second, Iowa Code 486A.405 provides special remedies for partnership issues.  A partnership may maintain an action against a partner for a breach of the partnership agreement, or for the violation of a duty to the partnership, causing harm to the partnership.  A partner can also sue the partnership or another partner for legal or equitable relief, with or without an accounting as to partnership business.  Those types of claims by a partner can include enforcing the partner’s rights under the partnership agreement and enforcing the partner’s rights under Iowa’s partnership law (Iowa Code Chapter 486A).

Please note that, as with other types of litigation, partners or a partnership involved in a lawsuit are responsible for their own attorney fees and litigation expenses.  That’s one reason why it’s important to try to avoid or at least minimize partnership disputes before they get out of control.  Not many true “winners” emerge from a partnership lawsuit.