Can I Sue My Business Partner for Fraud?

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When two or more individuals enter into an agreement to run a for-profit business together, they agree to act in an honest and trusted manner. Unfortunately, not all business relationships remain successful, especially if your business partner has acted in a dishonest way that is harmful to the business. Generally, a formal partnership agreement is drafted that details the expectations of each person in the partnership. If the specifics of this contract are breached, you may be able to take legal action.

What Is Partnership Fraud?

Partnership fraud is when a business partner knowingly misrepresents himself or herself or supplies inaccurate information for the sake of gaining some type of favorable outcome either for the business – such as adding extra numbers to figures to make it seem like profits or clients have increased – or for the partner – such as using for personal gain money that was meant for business purposes. If a business partner commits a fraudulent act, they have breached their fiduciary duty and can be subject to legal action.

Drafting a Partnership Agreement for Your Business

If not specifically stated in a partnership agreement, all business partners may be liable for fraudulent activity committed by one partner. At the start of a business partnership, therefore, it is important to draft a partnership agreement that outlines how various situations should be handled in the business. This includes determining legal liabilities and processes that need to take place if one partner acts in a way that creates legal issues for the business. It is important to draft a partnership agreement with an experienced attorney who can help establish guidelines for resolving potential legal issues.

Suspecting Your Business Partner Committed Fraud

If you believe your business partner is committing fraud, you should take action immediately and gather evidence that confirms your suspicions. Failing to act quickly could put you and the company at risk, damaging company performance and reputation. You will also want to be sure that your partner has committed fraud before acting on your suspicions. If you pursue such a lawsuit, you will need to provide evidence that a fraudulent act occurred.

If your business partner committed fraud, you may be entitled to take legal action and recover losses sustained as a result of the partner’s actions. Although pursuing a lawsuit against a business partner you once trusted may not be the most comfortable course of action, it may be the best option. You should work with an experienced commercial litigation attorney in the Inland Empire to gather necessary information and plan a strategy for handling the situation with the partner or partners.

Discussing Your Situation with a Commercial Litigation Lawyer

Pursing a lawsuit against a business partner can be a complex and stressful process. At McCune Wright Arevalo, LLP, our commercial litigation attorneys in the Inland Empire are here to help you with the legal processes involved in this type of case. Our goal is to put you and your business first, so we can resolve your case in a manner that is favorable to you. You and your business deserve the experience of our dedicated commercial litigation attorneys.

Connect with McCune Wright Arevalo, LLP online or over the phone at (909) 345-8110 to schedule a free evaluation for your case.

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