Making Decisions in Partnerships: Know What It Takes

When entering a partnership with the mutual goal of making money, the legal rights of each party may become murky. Squabbles may emerge when attempting to make decisions on behalf of the partnership. You may disagree with a partner’s decision, or disagree when it comes to the larger-scale direction of the partnership that your partner has promulgated. It is therefore important to know what is required in a partnership to understand your rights.

In a partnership, many decisions have to be made. These may come on a daily basis, or may be fewer and farther in between. They will range from making purchases on behalf of the partnership, to entering long-term contracts. Depending on what the action is that your partners purport to take will determine how much of a consensus is needed. For example, in Florida, the definition of authority in a partnership to make decisions is quite expansive. The Revised Uniform Partnership Act (“RUPA”), which Florida follows, states that “a partnership will be bound by partner’s actions for carrying on in the usual way the partnership business or business of the kind carried on by the partnership.” This is certainly a mouthful. In essence, in determining whether or not a partner could singlehandedly make a decision and bind the partnership depends on whether it was customary for the partnership to make such a decision.

While customary decisions may be left up to an individual partner to bind the partnership, other decisions require unanimity. Under RUPA, for example, bringing in a new partner requires the unanimous vote of all partners–not just a majority. The only interest a new partner can acquire without a unanimous vote is an economic interest–the profits or losses of a previous partner. However, that partner, without the unanimous vote, cannot take on a decisionmaking role.

These are just but a few examples of what it takes to make decisions in a partnerships. Many partners do not realize that larger decisions require a unanimous vote–a key right a partner retains in entering a partnership. It is possible that a partner has had this right violated without realizing it. If you feel as though your rights as a partner in your partnership may have been violated, called the Trembly Law Firm at (305) 431-5678 today to schedule a consultation.