Dunn Lambert, LLC

2 reasons partnership agreements should clearly state ownership

2026-11-06T21:35:35Z

Ownership percentages should be clearly laid out in a partnership agreement. They can be stated along with details like how profits should be split, how much investment is necessary, what roles each partner will have within the business, and much more. This is often a step that business partners are tempted to skip. They may just rely on a handshake agreement, where they both assume that they own 50% of the business. After all, they may be friends who knew each other before they launched the business, so there is some level of inherent trust. While it is good to have trust in a business relationship, it is still important to get everything into a partnership agreement and an official contract. Below are two reasons why ownership percentages are so important.

1. Making key decisions can become complicated without guidelines

While the business partners are working together, they need to make numerous decisions. These could be creative decisions, financial decisions or decisions about personnel and hiring new employees. Business partners with equal ownership shares should both have a say in these decisions, while unequal ownership percentages may mean that the majority owner can make decisions independently.

2. Selling the business can lead to litigation without clear ownership percentages

Furthermore, the business partnership may not last forever. Eventually, they may decide to sell the business and go their separate ways. When splitting up the proceeds from that sale, ownership percentages become very important because they help to define how much each person is entitled to. Drafting an official partnership agreement is a crucial step to take, and it can help to work with an experienced attorney at this time.

Can an email change a signed business contract?

2026-11-10T21:17:36Z

You signed a contract to supply 500 items for a set price. Later, the customer requests 100 more, and you discuss a higher total through email. You deliver the extra items, but the customer pays only the original price, which disrupts your cash flow. Under New Jersey law, that email exchange may change your contract if both businesses agreed to the revised terms.

When emails show intent

A contract modification means you and the other business agree to change a deal you already signed. New Jersey recognizes electronic records and signatures when both sides agree to handle a transaction that way, even if neither business prints a new contract. However, your original contract might require a written update with signatures from both businesses. If you face that requirement, the wording and purpose of each email matter. A typed name at the end of a message could qualify as an electronic signature if its sender intended to sign the record. An automatic email footer raises a closer issue about whether its sender meant to approve the new terms.

When the replies indicate agreement

Your customer's reply helps show whether you both accepted the new price. A response stating "We agree to the higher total" supports agreement on the same terms. A message asking for a discount could show that your talks were still open. Your actions after the exchange add context. You shipped the extra items, and the customer accepted them. That conduct may support the deal you described in your emails, especially if an invoice matched the revised price. The person who answered also matters. If a purchasing manager approved the new amount, that role might support their authority to speak for the business. The company's prior dealings with you offer another way to assess whether the reply carried approval.

Preserve the full exchange

You have a practical reason to examine the contract and the whole chain before you dispute the payment. You may want to retain the messages, invoices and delivery records together so you can trace exactly what each side agreed to. Those details help you assess whether a commercial claim over the unpaid amount has support.

Your partnership can end without shuttering your business

2026-10-22T13:00:15Z

If you and a business partner started your company together, you may consider the dissolution of that partnership to be the end of the business. If the two of you decide not to work together anymore, you will simply have to close your doors. This can be necessary in some cases if both people were critical to the ongoing work that the business was doing. But it is important to remember that, even if your partner wants to leave, that does not necessarily mean you have to close your business. Instead, you can buy out their ownership share and move forward as the sole business owner on your own.

Compensation and debts

Exactly how this is handled depends on the business's financial state. For example, perhaps the company has been profitable. If it has a significant financial value, your partner will likely want compensation for their ownership share. Exactly what percentage they own should be addressed in your partnership agreement. You will have to buy them out by paying them the appropriate amount of compensation to cover that ownership, giving you full control of the business. If they are leaving because the business is not profitable, however, the company might still hold significant financial debts. In a case like that, you may be the one pursuing financial assistance to pay off their portion of this debt. You do not want them to simply exit the partnership and leave you holding all of those obligations. Naturally, however, your business structure also matters. If your company is an LLC, then you may not be personally responsible for the debt anyway. It belongs to the business itself. Things can become complicated when addressing business structures, partnership agreements and contractual obligations. An experienced attorney can help you navigate this process.

Choosing the right business structure in New Jersey: LLC vs. Corporation vs. Partnership

2026-10-15T13:31:12Z

New Jersey business owners often weigh the flexibility of a limited liability company against the stricter oversight of a corporation. New Jersey business formation also includes the general partnership, which requires no state filing. Each structure sets different rules for liability, taxes and paperwork so that founders can match an entity to their goals.

How each New Jersey business structure works

An LLC, a corporation, and a general partnership each divide ownership and control differently. The New Jersey Revised Uniform Limited Liability Company Act governs LLCs. The New Jersey Business Corporation Act governs corporations. A general partnership forms when two or more people run a business for profit, even without a written agreement.

Liability protection for owners

An LLC or a corporation generally protects owners' personal assets from business debts. General partners, however, remain personally liable for partnership debts. A creditor can pursue one partner for the full amount of a debt another partner created. This protection has limits. A New Jersey court may ignore it when owners mix personal and business funds or skip required formalities.

Tax treatment of each entity

LLCs and general partnerships are pass-through entities by default, so profits flow to the owners' personal tax returns. A C corporation pays tax on its own income. Shareholders pay again on dividends, a process known as double taxation. A qualifying LLC or corporation can file an S corporation election with the Internal Revenue Service to regain pass-through taxation. The New Jersey Department of the Treasury manages state business taxes, so owners must also meet state filing duties.

Formation requirements and ongoing compliance

Forming an LLC or a corporation requires a state filing, though the paperwork differs by entity:

LLC: A certificate of formation creates the company, and an operating agreement sets member rights and duties.
Corporation: A certificate of incorporation creates the company. Corporate bylaws govern directors, officers and shareholder meetings.
General partnership: No state filing creates it, but a written partnership agreement defines profit sharing and decision-making.

LLCs and corporations must also file annual reports with the New Jersey Division of Revenue and Enterprise Services to keep their status active. A general partnership has fewer formal duties. This often appeals to small owners despite the risk of personal liability.

A framework for choosing an entity

New Jersey business entity selection usually comes down to three questions. Founders can answer them before filing anything:

Risk: A business with lawsuit exposure, debt or employees points toward an LLC or a corporation.
Taxes: Owners who want profits reported on personal returns lean toward an LLC, while those who plan to reinvest earnings may accept corporate tax.
Administration: Owners who want few formalities prefer an LLC, and those who want a board and issued shares choose a corporation.

The answers rarely point to one entity alone, so founders may weigh them together with their growth plans.

Matching the entity to the founders

The right choice depends on the founders' priorities for management control and pass-through tax benefits— an LLC suits owners who want flexible management and personal liability protection. A corporation suits a business that expects to issue stock to investors. A general partnership suits owners who want simplicity and accept shared personal liability. Changing entities later can trigger tax consequences and new filings. The first decision carries weight. This is the kind of choice where legal advice is worth having.

Consumer confusion and intellectual property

2026-11-10T21:19:01Z

Business litigation sometimes happens because one company is accused by another of deceiving consumers. At the heart of the issue is often an intellectual property (IP) violation. Maybe one company is operating under a very similar name as another, for example, or has copied the designs, packaging and marketing materials that have already been successful for another business. Often, these unfair business practices are illegal. A company may have IP protections like trademarks, patents and copyrights in place. If another business has violated these protections simply to trick consumers and make more sales, this is an illegal business practice that can cause severe financial damage to the company that owns the IP. Legal action may be necessary.

Considering the consumer

There are situations in which two businesses have similar names. Does that mean a lawsuit is necessary? In many situations, it is important to consider the potential for consumer confusion. If two businesses are in much different industries, for example, they may be able to have similar names because they are offering much different products and services. The same is true if they are in very different geographical locations, where consumers are not likely to mix the two up. Problems can arise when a business in the same area is selling similar products and also using a similar name. That deceive consumers and shift buying practices.

Considering business litigation

When negotiations and communication are not enough, litigation may be necessary. It is crucial for business owners to be aware of the legal options they have to protect their rights and their business.

Financial infidelity between business partners

2026-09-24T17:19:52Z

Financial infidelity is something that is often talked about in the context of marriage. It generally just means that couples are not honest with each other about their finances. A person’s spouse may lie to them about spending, debt, or income levels, for example. But this can also happen in a business context. For instance, business partners may be dishonest with one another about how they are using company funds. This can cause the trust between the two to break down, the same way that it would in a marital relationship. Honesty and trust are fundamental both to marriages and business partnerships, so when this breaks down, it often leads to the end of the relationship.

Breaching their fiduciary duty

When it comes to business relationships, a big problem is that financial issues could cause one person to breach the fiduciary duty that they owe to their business partner and to the company that the two own together. If that person has misappropriated funds and lied to cover it up, that is going to cause significant conflict if the truth comes to light. But even when funds are used for business purposes, conflicts could occur. One business partner may feel that the other is frivolously wasting limited funds on extravagant expenditures, like business trips. They may believe that the spending needs to be much more closely monitored. In fact, these conflicting values could be the reason that the two are not communicating well about finances or why one business partner would even lie about their use of business funds. They just see things differently and may not be compatible.

Navigating a business divorce

When financial infidelity and other types of conflicts arise, business partners often go their separate ways. As partners go through a business divorce, it is crucial that they know what legal steps to take to protect their interests.

When a vendor abruptly increases their prices

2026-09-17T03:11:19Z

Working with specific vendors can help organizations keep their costs predictable. A long-term vendor contract can protect a client organization from unpredictable costs or an inability to source key goods or materials. They can potentially rely on regular deliveries from the vendor. When there is a clear vendor contract in place, business leaders may take for granted that they have locked in pricing that works for the company. However, vendors may announce the intent to change their pricing with little warning. What rights do clients have when a vendor suddenly changes their prices?

Vendors must uphold contracts

There are many reasons why vendors may want to adjust what they charge for goods and materials. Perhaps they face price increases in their supply chain that leave them unable to maintain prior pricing because it results in a loss. Maybe inflation in general has led to higher operating costs, forcing them to rework the budget and assess revenue streams. Regardless of the reasoning behind the adjustment, the vendor should honor the contract. Failing to do so can constitute a breach of contract. The agreement may require a certain amount of advance notice before pricing increases take effect. The client organization may also have the option of canceling the contract outright rather than agreeing to the pricing change. If vendors simply increase their prices without communication or otherwise fail to uphold the terms of a written agreement, then the businesses affected by those decisions could potentially take legal action. A lawsuit could result in contract rescission or even an award of damages. Reviewing communications and contracts with a business litigation attorney is often the best option for companies facing a sudden surge in prices. Legal guidance can prove helpful during negotiations and if litigation becomes necessary.

2 reasons business partners should have complementary skills

2026-08-28T16:05:40Z

When someone is looking for a business partner, there is often a natural inclination to look for someone who is similar to themselves. It is easier for them to get along; they see things the same way, they are more likely to have similar goals and their visions for the business will align. To some degree, these factors can be important. Business partners do need to get along, and shared goals can be helpful. But when it comes to the skills and traits that each person brings to that business, it is often best for them to be a bit different. These skills should be complementary, rather than overlapping.

A lower chance of disputes

One benefit of having different skill sets is that partners are less likely to get into conflicts and disputes. They will naturally control different areas of the business and make different types of decisions. When two people are extremely similar, it can actually lead to a higher level of conflict. Two people who each want to make the same creative decisions or financial decisions, for example, could find themselves at odds so often that it leads to a business divorce.

Making the business stronger

Additionally, complementary skills strengthen the business as an entity. If one person is better at creative decisions or design decisions, for example, while the other is better with the financial details, they work together to give the entire business proficiency in multiple areas. On the other hand, when both people are similar, they may be lacking skills in other areas that can hold the business back. If this leads to a lack of long-term success, it can also eventually lead to a business divorce, as the partners decide to go their separate ways. Finding the right business partner is important, but nothing guarantees that the partnership will last forever. When partners decide to dissolve their business relationship, it is important for them to know what legal steps to take.

3 steps to handle partner debt in business divorce

2026-11-10T21:22:17Z

When business partners separate, dividing shared debt creates tension. Unpaid company debt can leave you personally responsible for balances long after you leave the business. Taking clear legal steps to divide debt protects your personal bank account.

Conduct a complete audit of all business liabilities

Before dividing financial debts, you must list everything the company owes. Collect every financial record tied to the business, including:

· Credit card balances and open lines of credit

· Unpaid bills from vendors and suppliers

· Leases for equipment or office space

· Unresolved lawsuits or back taxes

Gathering these financial documents identifies known debts. In New Jersey, closing companies can also issue official public notices to lenders. This sets a strict deadline that cuts off future claims from unknown creditors.

Assign liability responsibilities in a formal separation agreement

Once you know what the company owes, write down who will pay each bill. Your separation contract needs clear rules covering:

· Promises to repay you if your ex-partner fails to pay an assigned debt

· Specific dates when shared balances must be paid in full

· Responsibilities for taxes tied to canceled debt

A promise to repay gives you the right to sue your former partner if they break the agreement. However, it does not stop lenders from coming after you if your name remains on the account.

Refinance joint debts to release personal guarantees

Banks do not follow your private separation agreement. If your name stays on a bank account or loan, the lender can demand payment from you directly.

To eliminate your personal risk, you can refinance the debt under your partner's name, obtain a formal written release from the bank or sell company assets to pay off the balance in full. Partners in general partnerships may also be freed from debt if a lender changes loan terms without consent after learning of the separation.

Protect your personal finances during a business separation

Sorting out business debt requires careful legal planning. Speaking with a qualified business litigation attorney helps you build a strong settlement that settles old debts and keeps your personal money safe.

Disputes arising from ambiguity in business contracts

2026-11-10T21:24:07Z

Many business divorces stem from contract disputes. Cases of co-owners, partners or shareholders ending a business relationship because of contract-related issues are common. Disagreements typically involve day-to-day operations, profit distribution, compensation, company funds, intellectual property and deadlock. Various factors can lead to contract disputes – one of which is ambiguity.

Conflicting interpretations of rights and obligations

Vague words in a business contract can result in conflicting interpretations of each party’s rights and obligations. For example:

A partnership agreement that does not clearly define the day-to-day roles of each partner can lead to important work being undone or the same job being done twice, resulting in wasted time and resources.
An agreement that states a partner gets a share of “net profit” without specifying what counts as expenses can lead to disagreements. One partner may believe the other is making high corporate deductions and, in turn, lowering their share.
A shareholder agreement with unclear voting thresholds, such as one that uses terms like “substantial majority” instead of a clear numeric definition, increases the chances of severe corporate deadlocks.
Vague buyout formulas are also risky. When remaining members want to buy a departing partner’s share but the agreement states “fair market value” without a defined appraisal method, that can leave room for different approaches that yield wildly different figures.
Conflicting clauses can also cause disputes. For example, when the profit clause of a partnership agreement says profits will be split by ownership percentage but the compensation clause gives a working partner a high guaranteed salary first, resulting in low shareable profits for the rest.

Vague contract language opens the door for everybody to interpret clauses the way they prefer, and that often leads to litigation. Learn more about contract disputes and how to solve them to protect your business.