Can I Sue a Business Partner for Negligence?

Negligence is when someone is careless with their responsibilities or duties. In a business, when a business partner is negligent, they are careless regarding their responsibilities that have to do with the business. Dealing with a situation where your business partner has been negligent can be frustrating and complicated. After all, you trusted each other enough that you decided to go into business together. But, if your business partner is negligent, you have the right to sue them. A good option is to hire a business attorney to thoroughly go over the contractual agreement you have with them to determine how to go about the process.

Although hiring an attorney will be the wisest choice to help get you set up, there are a few things to know before deciding to sue your business partner.

The Agreement

When you and your business partner signed an agreement, there needed to be something in the agreement that stated who would take on a managerial role. Based on your contract, this will tell your lawyer who took on what roles and responsibilities and the expectations set for each party in the agreement.

When each partner has their managerial role, this comes with a fiduciary duty to the partnership and business. Having proper fiduciary duty means that you take reasonable care with business decisions and act in good faith towards the business and partnership. If a partner does not take this duty seriously, they can be sued by the other partner for negligence.

What is Considered Negligence?

There are many things that someone can do to make them negligent in a business partnership. One way is if they do not abide by the contract that you both had drafted upon becoming partners. For example, if you were supposed to make a joint decision of who to hire, but your business partner hires someone without you, this can be seen as negligence. Mishandling the business’ money and failure to evaluate a business deal are also forms of negligence. When you both are managing partners, each person must make the best decisions for the business. If someone overspends company money for personal use or signs a contract for a business deal without the other’s consent, this is considered negligence. Hiring unqualified employees can also be a form of negligence since it puts the business at risk of failure.

Hiring a professional lawyer will help you correctly determine if your business partner has been negligent. And, although suing your business partner may seem like the best option, there are other options like mediation, where you and your business partner get together with a professional mediator to settle the matter in private without a costly and time-consuming trial. Each side will present their evidence and concerns and, hopefully, come to an agreement. Then, the mediator will draft a legally binding contract to finalize your settlement.

No matter your decision, make sure you make the best one for you and your business. 

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Posted - 12/07/2021