Business ventures often start as devoted partnerships, but when issues start to arise or there is exponential growth, business partnerships may start to crumble. If you started a business with a partner that is ready to call it quits before you are, you might be wondering if you can sue them for abandonment. Our Seattle business law attorneys explain what you can do if your business partner failed to follow through on your business agreement.
Can a Business Partner Leave a Business?
A partner is free to leave a business partnership whenever they want to. However, this will result in a partnership dissolution. Even if the partner is free to leave the business, they could face serious legal repercussions if they failed to follow their business agreement.
You may have legal grounds to sue your partner for abandonment if:
- Their abandonment is a breach of the partnership agreement (contract)
- They intentionally or inadvertently acted against the business's best interests for their own gain
- If the partnership agreement set a duration for the partnership and the partner abandoned the business before the terms allowed
Breach of Fiduciary Duty
Business partners have the legal obligation and fiduciary duty to each other and the wellbeing of the business. Fiduciary duty means that they have the duty to act in good faith, the duty to care, and duty of loyalty. It is common for business partners to stop performing essential business roles after they have made the decision to leave, but before their duties to the partnership are absolved. You can file a claim against your partner if the business experienced financial loss related to their wrongdoing or for failing to follow their fiduciary duty.
How Can I File a Fiduciary Duty Claim?
To file a successful fiduciary duty claim, you must prove that a fiduciary duty existed, that it was breached, and that damages resulted from the breach. For example, say your business partner knew that they wanted to leave the partnership and decided to slack off in their role before notifying you of their departure. If their mental “checked out” cost the business financial loss, you could file a claim against your partner. If you have a valid business agreement that proves your partner had a fiduciary duty to protect the business’ best interests but failed to do so, you could have a claim.
What If Fraud or Intellectual Property Theft Was Committed?
If your partner stole from the business or engaged in other fraudulent activities, it can be considered a crime in addition to being a civil breach of duty. If your partner stole from the business, you can file a civil suit against them to recover the amount lost. The partner could face serious criminal charges if they committed fraud or stole from your business.
How Can I Protect My Business?
If your partner has left your business, you might be wondering what you can do to make reparations and protect your company. The first step is to consult with an experienced business law attorney. Our team at Northwest Business Law LLC has helped businesses across Washington resolve and prevent legal issues so that they can succeed. We are here to help you too. We can analyze your situation and determine if you have a claim against your partner. Our team is here to help you recover any financial losses that may have come with partnership abandonment.
Contact our Seattle business law attorneys today at (206) 565-0090 to schedule a case review!