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socrateaser, Attorney
Category: Business Law
Satisfied Customers: 38572
Experience:  Retired (mostly)
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Is equity in a partnership earned if all the required sweat

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Is equity in a partnership earned if all the required sweat equity contribution has not been met? I have a partnership agreement with a 50/50 split. I contributed the capital as required by the agreement but my partner has not completed all the required sweat equity hours. Now she wants bought out. My argument is that she does not own her 50% since she has not met her sweat equity contribution requirement

A court of equity would give your partner the proportionate value of her contribution, whatever that may be. The legal maximum is: "Equity abhors a forfeiture," which means that the court will not permit an unfair contractual agreement to completely deprive a party of any part of the benefit of the bargain.


Hope this helps.


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Customer: replied 7 years ago.
So if she was suppose to contribute 200 hours and only contributes 100 before the partnership is disolved then would she only be entitled to 1/2 of her equity in the partnership? Thus she would have only earned 25% of the company, not the 50%?
That's how I'd rule, if I were the judge.
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