Suing a business partner can be hard to make. But sometimes, it may be your only option. This is possible when business disputes arise. If your partner is acting in a way that can harm your business, you may want to pursue litigation. New Jersey business lawyers can help you make the best of this tough situation.
When Can You Sue a Business Partner?
In a partnership, each partner hopes to work together to grow the company. However, sometimes, this doesn’t occur. Although not all business disputes warrant a lawsuit, there are times when you have legal grounds for filing a suit. These include the following:
- Fraud or theft. Stealing company money or property deserves adverse action. If your partner is involved in this misconduct, you may want to sue them for fraud or theft, which erodes trust and ruins relationships.
- Breach of fiduciary duties. Partners in businesses have an obligation to their partners to act with loyalty, honesty, and faith. But some partners may breach these fiduciary duties by acting in their interests rather than doing what’s right for the company. In case of a breach of fiduciary duties, the other partner can initiate litigation to save the company from risky conduct.
- Breach of partnership agreements. When parties set up a partnership, they sign a partnership agreement outlining their rights and responsibilities to their partners and the company. A breach of this agreement can result in a lawsuit where one partner wants to recover damages. A business attorney can help determine if a partner has a claim against their partner and explore all available options.
Alternatives to Litigation
Litigation is an expensive and time-consuming legal process. In many cases, it may not be the best way to resolve partnership disputes. When you take legal action against your partner, you may not be able to work with them and this can threaten the ability of your business to continue.
Filing a lawsuit against a business partner will expose the internal conflicts of a company to public scrutiny. A lawyer can help you consider alternative dispute resolution methods like arbitration and mediation. Such methods can be less expensive, more private, and can result in better outcomes than business litigation.
Mediation is an alternative dispute resolution that involves a neutral mediator helping partners reach a settlement agreement. Arbitration is usually more formal and can be a less complicated version of a trial. It occurs privately between the disputing parties.