Assistance from a Cheongju law office | A client who recovered more than 500 million won as a settlement amount from a partnership relationship

After obtaining a certified public accountant qualification, the client started an accounting firm partnership with Mr. A. About 3 years later, another accountant joined and OO Accounting Corporation was established, after which two tax accountants joined.

Having thus entered into a partnership agreement with the four of them, the client and the others agreed to set each party's equity stake at 20%, and decided that performance-based pay would be distributed according to the equity ratios from the surplus after settlement of accounts.

However, out of a desire to take more of the performance-based pay, Mr. A proposed introducing a differential performance-pay system applying a standard favorable to himself. The client objected, stating that this was not contained in the contract and could give rise to conflict among the members, but because the other defendants said, ‘Let us try it once first,’ it was ultimately decided to distribute the performance-based pay according to the standard created by Mr. A.

However, in the month in which that decision was made, the client alone did not receive any performance-based pay.

The client thereupon raised the issue that the newly created performance-pay standard was unreasonable and proposed changing it to a different method, but the defendants unilaterally terminated the contract with the client.

The certified legal notice sent by the defendants stated, “In accordance with your request to terminate the partnership agreement, the partnership agreement is terminated.” Because the client had never expressed an intention to withdraw from the partnership relationship of his own accord, the client wished to file a lawsuit on the basis of breach of the partnership agreement.

🔗A partnership refers to two or more persons jointly operating a business through money, other property, labor, or the like. A body established to distribute the profits or losses arising from operating a joint business through a partnership agreement falls under a partnership enterprise.

Where a body that constitutes a partnership enterprise applies for the application of taxation special provisions, tax benefits are granted to the relevant partnership enterprise.

✔ Exemption from income tax

✔ Exemption from corporate tax

The causes for which a partnership relationship is terminated include the following.

(1) Occurrence of a cause stipulated in the original partnership agreement

(2) Agreement of all the partners

(3) Claim for dissolution

Defendant Mr. A prepared an application for correction of business registration without the client's consent and secretly changed the representative to himself. In addition, without the client's knowledge, he obtained a new office, completed interior construction, and moved the employee who had worked together, as well as computers and other equipment and supplies.

As a result, the client had to hire new staff and purchase supplies in order to perform accounting work for the existing clients, and argued that he had the right to claim the costs for this.

Through an appraisal, Daeryun calculated the appraised value of the client's partnership share in OO Accounting Corporation following the defendants' unauthorized termination of the partnership agreement, and argued that the client should receive damages corresponding to this.

The client suffered great mental shock because the defendants unfairly terminated the contract and incited the employees to ostracize the client.

It was argued that the defendants should therefore also pay damages for emotional distress for the client's mental damage.

If you wish to receive your settlement amount properly when ending a partnership relationship, it is advisable to obtain the assistance of a specialist attorney. In particular, as in the case above, if you have been unfairly subjected to termination of a partnership agreement, it is possible to entrust matters such as an appraisal in order to accurately ascertain the damage and to claim damages for emotional distress together with it.

At Daeryun LLC, a team of 3 to 20 specialist attorneys with extensive experience in related lawsuits is formed for the client's case to provide assistance, so if you need help, please visit 🔗Daeryun Cheongju Office.