In Hawaii, we have a partnership statute which governs the ownership, operation, dissolution (break up) and winding down (ending of the business) of partnerships. An agreement (contract) between the partners can change many portions of our partnership statute (but not all portions).

A partnership is formed when two persons (or corporations) agree (in writing or orally) to operate a business together for profit. You do not need to have a comprehensive written partnership agreement to form a partnership. If you do not have a partnership agreement, then our partnership statute controls many aspects of your ownership, decision making, dissolution, and winding down rights.

In a general partnership, each partner is a fiduciary of all other partners and the partnership. As a fiduciary, each partner owes his other partners and the partnership duties of due care; full disclosure; and utmost good faith and fair dealing in all partnership activities. In a limited partnership, each general partner is a fiduciary of all general and limited partners and the partnership.

Although the concept of a partnership is fairly simple, issues, problems and disputes arise such as: (1) disagreements between partners; (2) a partner who leaves, dies or becomes incapacitated; (3) a partner who takes a partnership opportunity for himself or herself; (4) a partner who causes harm to the partnership; and (5) many other issues, problems and disputes.

Where a partner has breached a partnership agreement, violated the partnership statute or breached any fiduciary duty, the other partners have the right to recover damages from that partner, to exclude that partner from the partnership or to have the court dissolve and wind down the partnership.

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