People who start business partnerships expect their partners to fulfill their contracts. Typically, those running a business together have a fiduciary duty to the organization. They should always prioritize the company’s best interests, even above their own wishes.
Some people do not feel satisfied with their wages or profit-sharing as a business partner. They may seek additional ways to enrich themselves while developing a business, even if those efforts have a negative impact on the company. Partners who discover a pattern of self-dealing may potentially have the right to take legal action to resolve the matter.
How can litigation help?
Self-dealing occurs when someone in a position to make business decisions grants contracts to themselves or to another business in which they have an interest. For example, if they are also a partial owner of their spouse’s office cleaning service, they might hire that company to provide services for the company at an above-market rate.
Any sort of self-dealing that undermines company profit margins for personal benefit could lead to legal action in civil court. Provided that there is adequate evidence of self-dealing or similar forms of financial misconduct, a judge could award damages to the partner who has not subverted the company’s best interests for personal profit.
Litigation could also result in a termination of the partnership agreement or a buyout arrangement between the partners. In some cases, simply initiating the lawsuit could be enough to inspire a partner to sit down and negotiate a settlement outside of court.
Frustrated business owners who have uncovered financial misconduct may need assistance as they evaluate their options, and that’s okay. Pursuing a business lawsuit can be an appropriate response after the discovery of a partner’s self-dealing.