A successful business partnership is a beneficial economic arrangement for everyone involved. A failing or unbalanced partnership, on the other hand, can have an unfair negative impact on someone who entered the arrangement in good faith.
Occasionally, those that have started business partnerships reach the uncomfortable realization that their partner is more of a liability than an asset to the organization. In some cases, people can resolve issues with their partners amicably and privately. Other times, it may be necessary to take matters to civil court.
Those embroiled in an unsuccessful partnership affected by misconduct could potentially litigate to remove their partner from the business or seek compensation for the negative impact their actions have had on the organization. The three types of inappropriate business behavior outlined below are common triggers for lawsuits between business partners.
Embezzlement
Taking money or resources from a business damages the organization. It may also deprive one of the partners of their fair share of assets and income. When one partner has concrete financial evidence of the embezzlement of the other or video footage of them removing physical resources from the business, they may have grounds to both remove them from their position at the company and pursue restitution for the value of the assets embezzled.
Self-dealing
Individuals who invest in businesses frequently diversify their holdings. They may have an ownership interest in multiple small businesses and professional practices. Business owners may engage in self-dealing, which involves contracting a business they own to provide services or materials for the company. People might also offer contracts to companies owned by people they know in order to obtain kickbacks. Self-dealing puts personal profit ahead of company interests and can be an actionable form of partner misconduct.
Falsifying company records
Intentionally misrepresenting financial matters on company paperwork could be a warning sign of embezzlement. Other times, people engage in financial obfuscation because their incompetence or negligence has cost the company money. Scenarios involving falsified financial records could warrant the removal of a partner from their role at the company due to their dishonesty.
While it is never easy to take legal action against a business partner, doing so is sometimes necessary for the protection of someone’s investment in an organization. Seeking to remove a partner who has behaved improperly can ultimately benefit the business and the other people invested in it, under certain circumstances.