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Can you sue your business partner?

On Behalf of | Jan 14, 2022 | Commercial litigation |

When you and your partner go into business, you likely do not consider whether the partnership will end poorly. You enter the agreement with excitement for each other and your company’s future.

Like other types of agreements, a partnership that starts well can become challenging when your partner no longer fulfills their side of the arrangement. In addition to dissolving the partnership, you may need to recover some of your losses from their negligence.

Here’s what you should know about filing a lawsuit against your business partner.

A duty to the partnership

When you create a partnership, you and your partner agree to work together to advance the business. While there will be ups and downs as the business grows, both of you should be working on the same team with the same goals.

When your partner deviates from the goals of your business or starts acting contrary to them, they violate the partnership. As you look toward solutions for recovering from your partner’s actions, there will be a question of the amount of damage the business incurred.

Their investment may be a factor

In addition to the damages from your partner’s negligence or misconduct, you also need to factor their stake in the business. Often, the amount your partner has invested in the company will be subtracted from the amount in damages.

Know the agreement

Ideally, you and your partner have a formalized agreement detailing your obligations to each other and the business. However, you may still be able to make a claim even if you do not have a written agreement.

In the wake of your partner’s negligence, it is critical to know what your partnership agreement includes and how you can hold each other accountable. A formalized agreement often makes it simpler to outline where your partner faltered and what remedies you have available.