No one forms a business expecting that one of the partners will walk away. However, this happens all the time. One partner may have had enough and does not want anything to do with the business anymore. Sometimes, differences in business philosophy can lead to a split.
When one partner is still invested in a company’s success, it can be a crushing blow when another partner abandons ship. This is especially true if the abandonment leads to business dissolution or failure. In general, partners are free to leave a business at any point, even if the ultimate result is the company’s closing. However, there are situations where the remaining partner may be able to seek damages by claiming abandonment.
Situations that may lead to a lawsuit
There are certain situations where and abandonment lawsuit may be in order, including those involving:
- A breach of the partnership agreement
- The departing partner damaging the business in some way for personal gain
- A violation of fiduciary duties, such as taking customers or trade secrets
- An act of fraud or theft
- The departing partner absconded with intellectual property
Most partnership lawsuits turn on whether there was a breach has occurred. In some cases, a partnership agreement may call for partners to stay with the business for a set period. If a partner does not adhere to the durations outlined in the agreement, this could constitute a breach as well.
Weigh your options carefully
If you are thinking about suing a former business partner, proceed with caution. Even if one partner violated a partnership agreement’s terms, courts frown on agreements that are too broad or restrictive or improperly constrain employment opportunities. It’s best to explore your options with the help of a skilled legal professional.
