When to Sue Your Business Partner? – The Clues and Course of Action

Commonly, when a business partnership begins, both parties share the same goals and expectations. Nevertheless as time passes by, unexpected issues may arise including actions that undermine the company’s reputation and damage your business financially.

The best approach is to face this unavoidable conversation, talking directly to the business partner to see if you can solve the issue amicably. However, there are situations when the only solution to a conflict is to sue a business partner.

In this article, we will approach this situation from a legal viewpoint to discover when to sue your business partner is the only possible resolution.

Common Grounds for Suing a Business Partner in Florida

Let us say you are having problems with your business partnership. Before choosing the hard path, which is suing your business partner, you need to check if there is ground for a lawsuit.

Given that the underlying purpose of partnership lawsuits is to remedy damage to a business, common grounds include breach of contract, abandonment, negligence, criminal behavior, and other types of misbehavior.

In the following topics, we will give you an overview of the most common grounds for a business lawsuit.

1) Breach of Contract Agreement

The purpose of a business partnership is to reunite efforts into a common goal. Hence, business partners must share their respective opinions and decisions about the company’s essential parameters.

Nonetheless, when one business partner breaches a contract/partnership agreement, the consequences may not come as positive as expected. Before placing a lawsuit on your business partner for breach of contract agreement, you need to find valid elements to consolidate your claim.

The most common situation in which you may have a solid ground for suing your business partner is when you have a valid and enforceable partnership agreement, and your business partner has breached a term or multiple terms of the contract, resulting in damage for you or your business.

Any valid partnership agreement provides specific clauses to address courses of action in case of existing contract breaches.

2) Abandonment

From a legal viewpoint, abandonment occurs when the business partner leaves the partnership, which can lead to odd situations, such as a strayed business partner that continues to receive cash from the company despite not being active in his activities.

When it comes to business partnerships, all partners involved owe each other the duty to place the business’ interests above their own. Abandonment may be considered a breach of fiduciary duty, which can provide solid ground for suing a business partner.

3) Negligence

In layman’s terms, negligence is the failure to take proper care, and as a result, that failure causes injury or damage to someone. When actions done by business partners harmed the partnership or the business, it may provide grounds for a lawsuit.

The best approach in such cases is to seek guidance from a business law attorney to help you determine whether you have a negligence claim against your partner or not.

4) Intellectual Property Rights

Any factual violation of intellectual property rights belonging to the partnership may also give ground for a business lawsuit. Issues in this regard may include misbehaviors such as:

• Infringement of patent, trademark, or copyright rights.
• Counterfeiting of copyrights or trademarks.
• Misappropriation of trade secrets.

A partnership agreement may provide that all copyrights, trademarks, trade secrets, and patents belong rightfully to the partnership. Once one of the business partners starts using this intellectual property for their benefit, it can constitute a feasible ground for a lawsuit.

5) Criminal Acts Done By A Business Partner

It is not uncommon when one party of a business partnership finds out that their counterparty is taking shady shortcuts and acting unethically. Such criminal acts may include fraud, theft, stealing money from the partnership, or the customer(s).

As such actions can cost a lot in terms of reputation and credibility, this type of behavior may provide valid ground for suing a business partner.

When to Sue Your Business Partner? – Final Thoughts

Suing a business partner is undoubtedly an unpleasant situation, especially when the partnership started as a friendship as well.

Nevertheless, when there is no room left for a resolution out of the court, such as settlement, arbitration, or mediation, you will probably need to take a step further and sue your business partner.

Do you need to sue a business partner? Jurado & Farshchian, P.L. will provide you professional guidance in this matter. Waste no time, call (305) 921-0440, or send an email to [email protected] to get help immediately.

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