You
What is the California partnership statute?
S
California adopted the Revised Uniform Partnership Act (RUPA) in 1996, codified at Cal. Corp. Code §§ 16101-16962. RUPA governs general partnerships in California (limited partnerships are under §§ 15900-15912.07; LLCs are under §§ 17701.01 et seq.). The key provisions for disputes are § 16404 (partner duties of loyalty and care), § 16405 (right to access books and to a formal accounting), § 16801 (events causing dissolution), § 16807 (wind-up obligations), and § 16701 (buy-out price calculation when a partner is dissociated).
You
What fiduciary duties do California partners owe each other?
S
Cal. Corp. Code § 16404 imposes three duties: (1) the duty of loyalty (account for partnership property, avoid self-dealing, refrain from competing), (2) the duty of care (no grossly negligent or reckless conduct, intentional misconduct, or knowing violations of law), and (3) the obligation of good faith and fair dealing. These duties cannot be eliminated by the partnership agreement, though the agreement can identify specific activities that do not violate the duty of loyalty if the activities are not "manifestly unreasonable." Breach of these duties is the most common partnership dispute and supports a claim for damages plus disgorgement of profits.
You
What is the right to an accounting?
S
Cal. Corp. Code § 16405(b) gives each partner the right to access partnership books and records and to demand a formal accounting. A formal accounting is a court-supervised review of partnership finances, transactions, and partner contributions and distributions; it is the standard remedy when a partner is being denied financial information or when there is reason to believe the books have been manipulated. The accounting is not just a recordkeeping demand; it is a judicial procedure that ends with the court issuing findings on what is owed between partners.
You
When can a partnership be dissolved?
S
Cal. Corp. Code § 16801 lists the events causing dissolution: notice of withdrawal by a partner in an at-will partnership, expiration of the agreed term, an event specified in the agreement, judicial determination that the economic purpose is unreasonably frustrated, partner misconduct that makes continued business not reasonably practicable, or other circumstances that make continuation impracticable. § 16807 governs the wind-up process: collecting assets, paying creditors, distributing the remainder according to capital accounts and the partnership agreement. A partner can petition for judicial dissolution when the other partner's misconduct is severe enough.
You
What's in the $1,200 demand + complaint package?
S
An attorney demand letter to the offending partner on my letterhead citing § 16404 (fiduciary duties), § 16405 (accounting right), and § 16801 (dissolution grounds) where applicable, with specific allegations and a settlement demand. The package also includes a court-ready California Superior Court complaint drafted for filing if settlement fails. The complaint covers breach of fiduciary duty (with disgorgement remedy), accounting (the § 16405 judicial procedure), partnership dissolution and wind-up (§§ 16801, 16807), and damages. Civil case cover sheet, summons, and a damages prayer are included. Three negotiation responses after delivery.
You
What if there is no written partnership agreement?
S
California recognizes partnerships formed by conduct alone. Cal. Corp. Code § 16202(a) states that "the association of two or more persons to carry on as co-owners a business for profit forms a partnership, whether or not the persons intend to form a partnership." Without a written agreement, RUPA's default rules apply: equal profit shares, equal management rights, and the default fiduciary duties under § 16404. Disputes without a written agreement are common because the partners often disagree about percentages, capital contributions, and exit terms. The demand letter and complaint document the partnership's existence through conduct evidence.
You
How is the buy-out price calculated when a partner leaves?
S
Cal. Corp. Code § 16701 governs the buy-out price when a partner is dissociated without dissolving the partnership. The price is the greater of liquidation value (what the partner would receive if the partnership were wound up) or going-concern value (the partner's share of the business if sold as a continuing operation). The partnership agreement can override the default formula, which is why agreements often include specific buy-sell provisions. In disputed dissociations, the price requires appraisal and often expert testimony. The accounting often runs in parallel with the buy-out valuation.
You
What about partner self-dealing and competition?
S
§ 16404(b) prohibits partners from competing with the partnership and from dealing on behalf of an adverse party. Common patterns: a partner diverts customers to a side business, takes a corporate opportunity for personal benefit, or contracts on behalf of the partnership with a related party at off-market terms. The remedy is disgorgement of profits plus damages plus removal from management. The partnership agreement can authorize specific activities (e.g., "partner X may continue running her separate real-estate business"), but the carve-out must be specific and not "manifestly unreasonable."
You
How are LLCs and partnerships different?
S
An LLC is a separate legal entity governed by the California Revised Uniform Limited Liability Company Act (Corp. Code §§ 17701.01 et seq.). A partnership is governed by RUPA (§§ 16101-16962). LLCs offer limited liability to members; general partnerships do not (each partner is personally liable for partnership debts). The fiduciary-duty framework is similar but the specific statutes differ: § 17704.09 governs LLC member duties, parallel to § 16404 for partnerships. Most modern California closely-held businesses are LLCs; partnerships persist mostly in professional services (law firms, accounting firms, medical practices) and certain real-estate ventures. The demand-letter analysis identifies which framework applies.
You
What is the statute of limitations on partnership claims?
S
Breach of fiduciary duty: four years under CCP § 343 (the catch-all statute) or three years under CCP § 338(d) if framed as fraud. Constructive fraud (breach of fiduciary duty involving misrepresentation or concealment) runs three years from discovery. Breach of contract: four years on written agreements (CCP § 337). Accounting: usually three to four years depending on the underlying claim. The discovery rule is important because partnership misconduct often goes undetected until the partner asks for records or notices distributions are off. The demand letter calendars the SOL based on the specific facts.