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Is it smart to sue a former business partner?

On Behalf of | Nov 10, 2021 | Business Law |

A business partnership often begins with dreams of long-term success, but not all of them last. Like a marriage, they sometimes do not work out because of differences of opinion, moving towards different goals or incompatibility. This can lead one partner to go off and pursue new opportunities, which can leave the remaining partner or partners feeling like they were left holding the bag or perhaps in serious financial or professional difficulty. The jilted partner may even consider suing for damages in abandoning the business and its employees.

As outlined in a partnership or operating agreement, the partner may have the right to leave. There may also be applicable Colorado laws if there are no controlling documents.

Grounds for damages

Valid arguments for damages will often fit into one of the following categories:

  • Breach of contract: While partners are often allowed to leave, they may have violated their non-compete or non-disclosure agreement.
  • Breach of fiduciary duties: There may be a valid claim of intentionally or inadvertently acting against the company’s best interests and well-being, mainly if they individually gain much by leaving.
  • Fraud: It may be argued that the departed partner misrepresented themselves or the company to clients or the company.
  • Theft: The departing partner may have exited with property owned by the company, including equipment, intellectual property, business secrets, or other things of value.

Is court the best option?

The business or departing partner can discuss the details of the dispute with an attorney who handles business disputes and civil litigation. They help determine if a lawsuit is a viable option and weigh that against the potential financial gain. They can also help a business enforce or defend a contract.