Legal Question in Business Law in California

My business partner and I formed a General Partnership in the state of California in 1996. I have filed a lawsuit against my partner, as he has transferred or diverted the assets, business, and contracts to himself or to one or more other entities that he owns or controls. Can I sell a percentage of my equity in the partnership to an interested party, prior to the lawsuit being settled?

Thank you.


Asked on 12/16/10, 2:14 pm

3 Answers from Attorneys
Joe Marman Law Office of Joseph Marman

Yes, provided your partnership agreement allows you to do so, and then only after a full disclosure of the problems with the business relationship.

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Answered on 12/21/10, 3:13 pm

Mr. Marman is correct, technically, but the key point is provided your partnership agreement allows you to do so. Very few do. If people want interests in the business to be freely transferrable, they generally choose an LLC or corporation as the form of the business.

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Answered on 12/21/10, 5:02 pm
Kevin B. Murphy Franchise Foundations, APC

As a Franchise Attorney I agree with the other attorney answers. Most partnership agreements are very restrictive when it comes to selling partnership interests to third parties. They often contain numerous restrictions, coupled with rights of first refusal, etc. Show your partnership agreement to and consult with a good business or franchise attorney in your area for specific advice.

Mr. Franchise - Kevin B. Murphy, B.S., M.B.A., J.D.

Franchise Foundations, a Professional Corporation

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Answered on 12/21/10, 6:00 pm


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