Legal Question in Business Law in California
I have a 50-50 partnership in a bar but the other owner is nothing but a liability on the business by drinking on site not charging customers an deceiving the books. Is there any legal recourse to vacate him based on his actions? Unfortunately there is no paperwork besides the label of a partnership an a hand shake.
2 Answers from Attorneys
Yes. The California Corporations Code imposes partnership terms on partnerships the do not have their own partnership agreement. Those terms includ provisions for how to dissolve a partnership and determine who gets the assets of the business. If your partner will not voluntarily comply with those provisions, you can force a dissolution by filing a court action to impose a dissolution and distribution. Unfortunately, unless your partner is cooperative, you are almost certainly going to need a lawyer to help you with this. You are also going to have some special considerations that need careful legal advice pertaining to your liquor license.
Without disagreeing with Mr. McCormick, I wonder how you could have obtained a liquor license without some more formal recognition of the existence of your partnership. It is indeed true that persons can become legal business partners without even an oral agreement, to say nothing of a written agreement ..... merely behaving like partners is sometimes enough to create a legally-recognized business partnership. However, my experience with liquor licenses (from many years ago, to be sure) suggests that two people cannot become co-owners or partners in a licensed business like a bar without completing a written application which, if I remember, would go into some detail about the nature of the ownership and management of the establishment to be run by the licensees. I do recommend seeing a local lawyer, and do think about other written documents such as your license application, your premises lease, credit applications submitted to booze suppliers, etc. which may contain written proof regarding the relationship between you and your partner.
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I have a 50-50 partnership in a bar but the other owner is nothing but a liability... Asked 12/08/16, 8:51 am in United States California Business Law