Business partnerships are common across Florida and the United States. Such partnerships have many benefits, but they can also have serious liabilities. When partners disagree or conspire against one another, everything you have worked so hard for could be at risk. Parrish & Goodman, Attorneys at Law, are sometimes asked, “Can I sue my business partner?” Let’s address this thorny issue.
Partnership Agreements and Florida Law
Florida laws govern business partnerships, but these laws are complicated. Your case against your own business partner will largely depend on your partnership agreement. “A partnership is a formal arrangement by two or more parties to manage and operate a business and share its profits.” “A partnership agreement is a legal document that dictates the way a business is run and details the relationship between each partner.” This agreement is legally binding and typically spells out such issues as:
· Who owns what portion of the business
· How profits and losses will be split
· The assignment of roles and duties
· How disputes are to be settled
· What happens if one of the partners dies prematurely
Partnership agreements that clearly outline expected contributions can serve as the basis for legal action if one party fails to meet its obligations or otherwise violates the agreement and harms the business. A well-crafted agreement may even include specific remedies for such situations, potentially preventing the need for litigation. However, if the agreement is unclear or does not address these responsibilities, a lawsuit against your business partner could be difficult.
Possible Reasons for Suing Your Business Partner
Yes, you can sue your business partner for neglect or activity that harms your business. Florida law governing business partnerships prohibits legal violations like:
Breach of Fiduciary Duty
Business partners owe a fiduciary duty to each other, meaning they are obligated to act in the company’s and its stakeholders’ best interests. If a partner breaches this duty by conducting activities that harm the business, they can be held legally responsible.
Breach of Contract
Business relationships are commonly regulated by contracts or operating agreements that define the rights and responsibilities of each party involved. If a partner disrupts the business in violation of these contractual agreements, it may provide a basis for a breach of contract claim.
Tortious Interference
Tortious interference is when a third party deliberately disrupts a business relationship or contract, leading to harm for one of the involved parties. If a partner disrupts your business’ contracts or opportunities, you might have grounds for a valid tortious interference claim.
Civil Conspiracy
When multiple parties conspire to harm a business using illegal methods like spreading false information or disrupting contracts, they may be subject to a civil conspiracy claim. This legal principle holds all parties responsible for their actions and any resulting harm.
Other issues can arise that suggest impropriety or wrongdoing. You should always seek counsel from a Florida Business Litigation Attorney when you suspect something in your business partnership is amiss.
How Can I Recognize Partnership Problems?
A business partner can sabotage your company in numerous ways, but sometimes, recognizing it can be challenging. Here are some red flags that can indicate problems:
1. Unexplained problems with the finances or missing funds.
2. Sudden drops in productivity or profitability without explanation.
3. Confusing or obstructing business decisions.
4. Pursuing personal ventures that are at odds with your company.
5. Unauthorized use of company assets for personal gain.
6. Undermining relationships or damaging the company’s reputation.
7. Withholding critical information or being secretive.
8. Dishonest or manipulative behavior.
9. Not fulfilling partnership obligations.
10. Frequent and prolonged absences without explanations.
It is important to be aware of your legal options if you believe that a business partner is intentionally causing harm to your business. Depending on the specific actions taken, you may have legal grounds for claims such as breach of fiduciary duty, breach of contract, civil conspiracy, tortious interference, and other legal considerations.
Suing your business partner can be tricky, so don’t act without all the facts. Contact Parrish & Goodman, Attorneys at Law, for help from experienced and knowledgeable Florida Business Litigation Attorneys.
