QUESTION
In a general partnership can one of the partners use the company’s money for his gas?
Asked on Mar 18th, 2014 on Litigation - California
More details to this question:
In the State of California a general partnership where a partner came in the business with his work experience and the other partner came in with the cash. We split profits from the sale of the houses we buy and flip. He fixes the houses up and gets 1/2 of the profit from the sell. He charges his gas and tools and expects that to be added in to the costs of materials and expenses for remodeling the house which comes out of the profit. That's double dipping. He has his brother doing work and pays him 1/4 of the profit from the sale of house which comes from his 50%. The thing is he has taking draws which means he is in the over 48 k which is my money not his, because he has already taken his profit out. He shouldn't be writing a check to his brother because he spent his brothers 1/4 percent too. He said it isn't fair to his brother not to get paid, I said know it’s not, you shouldn't of spent his 1/4. I feel I have been taken advantage of and want to end the partnership. I want to know if he is right on the gas, tools and paying his brother when he owes the business account over 48k after his share of the profit had been deducted from his debit?
3 ANSWERS
Health Law/Long Term Care Facilities for the Elderly Attorney serving Los Angeles, CA
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Murchison & Cumming, LLP
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You need a written partnership agreement. Otherwise your partner will get away with everything, and without a written partnership agreement there's nothing you can do about it. In a partnership all partners have management rights and can spend partnership funds on reasonable expenses incurred in the business, which could include gas, tools, and expenses of hired help. As long as you let him take the money, and to pay his expenses, you will not be able to complain. Based on your description of events, without a partnership agreement in place, litigation will not help. You need to call an attorney who can draft an effective partnership agreement giving you some control over expenses and management in the partnership. Then your partner can't unilaterally take the partnership funds, or spend on personal expenses. You can also limit draws to an agreed amount, and place limits on wages paid to helpers. Then if your partner violates the agreement you can litigate to recover what he wrongfully took.
Answered on Mar 24th, 2014 at 11:11 AM
Criminal Law Attorney serving Fremont, CA
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Steven J. Alpers, A Professional Corporation
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He should take out gas and other necessary expenses before calculating profit on the job. He cannot pay his brother half of his profits at this time. He and his brother are entitled to money. If he owes the company money, unless he agrees to it, you cannot take all of his share for repayment.
Answered on Mar 19th, 2014 at 4:06 AM
Elder Law Attorney serving Hollister, CA
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Charles R. Perry
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Your partnership is governed by your partnership agreement (whether it's written or oral), and any gaps in that agreement are filled in by California law. Without reviewing the agreement and/or seeing the partnership's books and records, it is not possible to advise you as to whether your partner's actions are proper. Unless your partnership agreement says something different, you have the right to bring the partnership to an end at any time. Once you give notice of the termination of the partnership, the business begins winding up its business, and making a final distribution to the partners. If you and your partner cannot agree on how to resolve this, you need to speak to a lawyer who handles intra-partnership disputes. Fights between partners are extremely expensive it is almost certainly best to make a deal with your partner at some point in time, rather than litigate it to the end.
Answered on Mar 18th, 2014 at 3:25 PM