Can you sue a partner who walks away from your business?

On Behalf of | Nov 10, 2020 | Firm News |

You may have entered into a business partnership with a one-for-all, all-for-one mentality. However, partnership dynamics can shift over time. A business partner may decide that they no longer want anything to do with the company. You may have disagreements concerning the direction the business should take.

Whatever the reason may be, it can be devastating when one partner opts to walk away while the other is still invested in running the business. This is particularly true if business dissolution proves to be the final result. That said, business partners are generally free to leave the company whenever they feel like it, even if doing so will make the business’s failure all but certain. However, there are certain situations where you may be able to recover damages from a partner who abandoned your business venture.

Situations where it may be possible to file a lawsuit

You may have a strong case for an abandonment lawsuit in the following types of situations:

  • There was a breach of your partnership agreement
  • The ex-business partner actively damaged the company for personal gain
  • The ex-partner violated their fiduciary duties
  • The ex-partner committed an act of fraud or theft
  • The ex-partner stole intellectual property

Many partnership lawsuits involve some form of breach. Your partnership agreement may have had a clause where a partner was to stay with the company for a minimum period of time. A partner who makes an early exit may be liable for damages.

Consider how you intend to proceed

You may wish to think hard before you decide to take legal action against an ex-business partner. Even if there appears to be a clear violation of your partnership agreement’s terms, a court will not uphold an unduly restrictive agreement. It’s also important to consider the impact a lawsuit may have on your reputation as a businessperson. You should weigh your legal options with the help of a skilled professional.

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