Legal Question in Business Law in Tennessee

dissolving a partnership?

In late 2001 I est. a partnership with a friend (screenprinting). She invested 14,000 and I invested 6,000. We recently had a falling out and she wanted out. I had written 2 salary checks when there was no money coming in. She says she can't trust me even though I put it right back. She gave me the choice of either buying her out at 27,000 or she would buy me out for 2,500. I was the only one recieving a salary and she said that since I had recieved 3,500 in salary that my share was only worth 2,500. She then went and changed all of the co. paper work (banking account, working accounts,etc.) without my knowledge. I still work and know recieve comission but she claims she is sole owner. I do ALL the work still. Is that right? I dont see how she could change everything w/o my knowledge!? Is my share only worth that much? What should I do? I want to stay w/ the business but she keeps on trying to ''push'' me out! Help!


Asked on 4/10/02, 4:56 am

1 Answer from Attorneys
Alan Crone Crone & McEvoy, PLC

Re: dissolving a partnership?

Business partnerships gone bad can be as messy and complex as a divorce. Emotions run high at a time when everyone should be approaching the problem with a business mindset. The Tennessee Uniform Partnership Act is the law which will govern the dissolution of this partnership.

The first place you should look for answers is your written partnership agreement, if you have one. If you do not have a written agreement then the Act will fill in the blanks.

You and your partner owe each other fiduciary duites and duties of loyalty. This means that neither of you can take unilateral action which prejudices the other without a very good reason.

Also valuation of a closly held business is very tricky. You will need an accountant or other expert to help you with that task. If you are unwilling to walk away from the business, which includes its goodwill, tradename, customer lists and other intangible intellectual property, you need to get an attorney who handles these types of matters and begin to plan an exit strategy immediately. You may have to resort to court action. Hopefully, this can be worked out mutually.

There are many, many, many other issues to address and resolve. You cannot do it alone and know you are doing it correctly.

I hope this helps. If you have any more questions, please do not hesitate to contact me. 901.527.5522 or [email protected]. www.cronemason.com

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Answered on 4/10/02, 10:04 am


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