How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask socrateaser Your Own Question
socrateaser, Attorney
Category: Business Law
Satisfied Customers: 37871
Experience:  Retired (mostly)
Type Your Business Law Question Here...
socrateaser is online now
A new question is answered every 9 seconds

Is equity in a partnership earned if all the required sweat

This answer was rated:

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.


Terms and Conditions: By your continuing in this conversation with me, or by your clicking “Accept”, you are expressly agreeing to all of the following: (1) our communication is for entertainment purposes only; (2) you are not consulting me in my professional capacity as an attorney; (3) you do not seek to establish an attorney-client relationship with me, nor do I with you; (4) you will not rely on anything I say and you will obtain appropriate legal counsel via a traditional/office consultation with an attorney licensed to practice in the jurisdiction where your legal issue arises (and you may not use our communication to avoid taxpayer penalties imposed by the U.S. Dept. of Treasury); (5) by communicating with me in this public forum you are irrevocably waiving any right to privacy, confidentiality and attorney-client privilege concerning the matters discussed. You further separately declare that any payment made by you is not consideration for this contract, nor offered for any services rendered by me on your behalf, but rather is made in genuine admiration and respect for my desire to help others. If you do not agree with these terms and conditions, then you must advise me immediately.

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.
socrateaser and 3 other Business Law Specialists are ready to help you