Business partners typically share certain priorities. They both want the company to succeed and become profitable. They may aspire to change or dominate a certain industry. Business partnerships can last for decades, with each partner performing key job functions and prioritizing the long-term success of the company.
Other times, partnerships can fail spectacularly, possibly due to a disagreement between the partners that they simply cannot resolve amicably. Disagreements about contributions to the company or how to reinvest profits could disrupt business operations and damage a previously healthy partnership.
Litigation is sometimes necessary to resolve disagreements between business partners. Adequate documentation is critical when going to court to resolve a partnership dispute.
What do the courts need to see?
A lawsuit brought by one business partner against another could serve several key functions. The courts could enforce the terms of a partnership agreement and help facilitate a buyout where one partner acquires the other’s interest in the company. The courts could also respond to allegations of embezzlement or other breaches of fiduciary duty.
If one partner has put their own enrichment ahead of the company’s success, then the other might be able to hold them accountable for the financial impact of their misconduct. The courts can also intervene in scenarios where one partner has attempted to conduct a transaction that could damage the business. A partner can even pursue an injunction to enforce restrictive covenants and prevent the other partner from unfairly competing against the organization or sharing the company’s trade secrets.
Those preparing for partnership litigation generally need to gather appropriate documentation. They need to present the courts with the partnership agreement and any relevant documents related to the organization the partners started together. They also typically need proof of any allegations they made regarding misconduct.
Financial records, emails and even contracts with outside parties could help validate claims of self-dealing and other forms of misconduct that harmed the business. Partners may also need to prepare themselves for a challenging process ahead as they seek to take over business operations or prepare to dissolve the company to protect themselves from the fallout of a business partner’s misconduct.
Reviewing a related situation at length with a legal professional can be beneficial for frustrated business partners concerned about their rights and finances. With appropriate assistance and planning, a lawsuit can potentially help to resolve a partnership dispute.