Being a business partner requires individuals to rely heavily on others to share in the common goals of a business by carrying a portion of the weight, contributing to new ideas, and trusting that each person is looking out for the best for their partner. But for many reasons, partnerships can take a turn, with one partner changing course in direction, leaving the other partner somewhat lost in rough seas and trying to navigate an approaching storm with minimal preparedness. Moving forward has to take place, but finding the way to proceed can be challenging.
Unfortunately, the next step you take may require the legal steps needed to sue your business partner for their actions or inactions. Moving forward with a Houston business divorce lawyer can provide the direction you need to come out on the other side with your finances intact. Let’s discuss some of the reasons you may need to sue a business partner in Texas, understanding that there is support to get through the uncertainty in the evolution of a business.
Reasons for Suing a Business Partner
Countless reasons may arise that require you to take legal action against a business partner. Many disputes can be resolved through settlements, arbitration, or mediation. Here are some of the most common reasons one business partner decides to sue the other partner.
Activities That are Criminal in Nature
It can be shocking to learn that a person you have placed trust in as a partner is engaging in criminal activity. As a partner, these behaviors can quickly reflect on you. Embezzlement, fraud, and theft by one partner are the most frequent activities that give way to legal action. Any of these actions reflect on a business’s overall integrity, potentially resulting in a tremendous loss for innocent partners. Suing may be your next course of action.
Breach of the Partnership Agreement
A partnership agreement defines how a business will run and sets a standard for operations, financial decisions, and the division of ownership. When one partner continuously steps outside this agreement, taking legal action to save the business is a valid option. How can you prove a breach of a partnership agreement?
Proving a breach of contract usually (but not always) requires documentation. The guidance of a Houston business litigation attorney will ensure that you have the information you need to pursue the damages you have suffered.
Breach of Fiduciary Duties
Each partner in a business has a responsibility to the business and to the other business partners to conduct operations in a way that is most beneficial to the company as a whole. At times, a partner can become distracted from goals that are best for everyone and begin to focus on benefiting themselves, taking from other contributing partners in the business. Examples of breach of fiduciary duties include:
- A partner profiting at the company’s expense
- Sharing the company’s trade secrets
- Acting to benefit a competitor
- Hiding or postponing essential documentation from other partners
- Participating in actions that damage a business’s reputation
A breach of fiduciary duty can damage a company and its partners. Disclosing a business’s intellectual property can undermine a company’s existence, making its demand plummet.
Abandonment reflects the actions previously discussed. It may be that a partner decides that the business is no longer where they choose to focus their energies. However, leaving a company can go against a partnership agreement that has established timeframes of commitment for each partner.
Additionally, suing for abandonment might be the course of action when a partner’s actions are for intentional gain, acting against the company’s best interest. Abandonment can result in a compromised position for the other partner.
A breakdown in actions that results in a lack of caution expected of a reasonable person is considered negligence. Negligence can have both short and long-term effects on a business. Either way, negligence is costly. Examples of negligence include:
- Extreme risk-taking in business deals
- Improperly evaluating business deals
- Hiring employees that are unqualified
- Mishandling money
- Mishandling of critical documentation
One partner’s negligence can result in legal consequences for all partners involved in a business. An example would be if one partner fails to hold up the agreements in a contract resulting in accountability for each and every partner.
Securing Representation to Prevent Lawsuits
Many people view hiring an attorney as an aggressive step further threatening the stability of a company, but this is not the case. Intervention is necessary if a partner’s actions have you considering filing a lawsuit. A Houston business attorney can present options and alternatives to help you avoid a lawsuit while securing your business interests to prevent impending failure.
Berg Plummer Johnson & Raval, LLP have decades of experience diving into the root of partnership challenges and offering solutions that efficiently work without disrupting business operations. A business attorney can also comb through the intricacies of partnership agreements to understand where each partner stands regarding their duties. Businesses constantly shift and change, requiring partners to be honest and share in the demands that any company can place on the responsible parties.
A Houston business attorney understands the value of exploring options other than a lawsuit when possible. Even when business partners consider settlements, approach mediation to find a resolution, or arbitrate to find legally binding solutions, a Houston business attorney will look out for your best interests to prevent the current conflicts from reoccurring in the future.
Protect Your Houston Business Investment
Every business partner hopes to approach a business conflict with the outcome being resolution. But the cost of doing nothing or moving slowly to prevent the collapse of a business can be devastating for every partner that has invested in a company. When alternative problem-solving methods fail to work, Berg Plummer Johnson & Raval, LLP will aggressively represent you in your case, seeing it through the trial process to reach a conclusion.
Partnerships are essential for business. So is finding representation that strives to maintain your stability in a company. Our Houston commercial litigation team is skilled in resolving partnership disputes but never shies away when it is necessary to approach a business divorce and file a lawsuit against a business partner.