Can a business partner be sued for abandonment?

| Oct 13, 2020 | Business Disputes |

Business partnerships start with the best intentions, but some fall apart when one partner leaves. Often, it is a matter of one partner giving up and moving on, while the other feels there is still an opportunity for success or obligations to clients or employees to fulfill. This split may prompt the one who stays to wonder if they can file a lawsuit for abandoning the business.

It depends upon the partnership or operating agreement, but generally, a partner is free to leave, even as it triggers a business dissolution. This dissolution is outlined in the initial contracts or under applicable state laws.

The conditions of abandonment

There may be conditions where a partner can sue for abandonment:

  • The departure is a breach of the agreement
  • The departing partner intentionally or carelessly caused damage to the business for their own gain.
  • They violated their fiduciary duties.
  • There was fraud or theft involved (though this could mean embezzlement).
  • Intellectual properties were taken.

Generally speaking, the abandonment issue has legal standing if there is a breach of the partnership agreement. It could be a matter of the partner not fulfilling the agreement’s duration or the agreement’s terms.

Is it a good idea?

The circumstances of each dispute are different. One benefit of pursuing legal action would be to secure funds to recoup losses caused by their departure or harmful behavior. Not only can this benefit the plaintiff, but it can help others involved in the case, such as employees.

It also depends on the initial agreements. Judges generally allow employees and owners to pursue employment, particularly if the original agreement’s terms were too onerous or unrealistic in scope. Those considering the benefits of pursuing a business abandonment lawsuit should review the agreement. They may want to discuss the matter with a business law attorney to better weigh their options.