Often times there are multiple contracts between parties. Well in reality as the saying goes … there is my story, your story, and the truth. And that’s basically where the declaratory judgment comes in.
Recently, we were representing a small business owner regarding her rights under a partnership agreement and based on the parties conduct. You see the parties created a limited liability company, but they never memorialize their agreement into a formal operating agreement. What they did instead was create a partnership agreement to deal with profits.
In other words, the Ohio revised code as a basic set of guidelines for owners of a company. But in this case, the parties created an agreement to supersede the basic guidelines. One of the issues in the case was the fact that they were operating as an LLC but were making decisions based on the signed partnership agreement. As you can see this is completely a mess.
And that’s where the declaratory judgment comes in. It allows a court to look at the parties conduct, intent, and written agreements to determine the parties rights, responsibilities, and obligations. It allows the Court to take the abstract and make it concrete by eliminating any vagueness and ambiguity.
So, what types of cases do declaratory judgments get used in:
- Real Estate contracts with multiple parties and entities
- Business with multiple parties, entities and responsibilities
- Insurance contracts to determine if the insurance company is legally obligated to pay for the damage.
In many cases, a declaratory judgment may be the strongest cause of action and allow you to win your case.