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Are you stuck with a shady business partner?

On Behalf of | Jun 9, 2021 | Business Litigation |

If you have a brilliant idea for a product or service, you may be itching to start a business venture. Still, financing and operating a business by yourself may not be feasible. Collaborating with a business partner may help you turn your dreams into reality.

Eventually, though, you may suspect your business partner may be engaging in illegal or unethical activities. If so, you must understand both your legal exposure and your options.

Are you legally liable for the actions of your business partner?

If your business partner commits a crime, you may have some legal liability. Even if you do not engage in the illegal activity yourself, looking the other way may constitute a crime. By contrast, if your business partner’s conduct is shady but not illegal, you may have to deal with the business-related fallout from it.

Should you report illegal conduct?

If you have evidence your business partner may have broken the law, you may want to report your partner to the proper authorities. Before doing so, though, you probably want to obtain independent legal counsel to help you protect your interests.

If you have no direct evidence, though, you may simply be looking to end the professional relationship you have with your business partner.

Can you force your partner out of the partnership?

If you are not comfortable working with a shady business partner, you may be able to force him or her out of the partnership. Your comprehensive partnership agreement is likely to detail your options. These may include the following:

  • Buying out your partner’s ownership interest
  • Reducing your partner’s authority
  • Dissolving the partnership
  • Exiting the partnership

Illegal conduct is the third rail of business partnerships, as it is often disastrous for both the business and the partners. Ultimately, acting quickly to stop your partner’s shady behavior may be the most effective way to protect your legal and financial interests.