Exposing Partner Deception: 5 Clauses For Accountability – Shareholders

Is your business partner acting in bad faith?

When trust is betrayed by a partner’s deceitful actions,
safeguarding your business becomes imperative. At Pitcoff Law
Group, we recognize the gravity of such situations and are
dedicated to aiding you in navigating the complexities of partner
theft. Below, we outline the 5 crucial clauses that can help ensure
accountability and protect your business interests:

Part 1: Breach of Fiduciary Duties: Partners in
a business are bound by fiduciary duties, requiring utmost loyalty,
good faith, and care. Acts such as stealing corporate
opportunities, assets, or engaging in competition with the business
constitute breaches of these duties.

Part 2: Usurpation of Corporate Opportunities:
This legal principle prohibits officers or directors from
exploiting business opportunities for personal gain without
authorization. If a partner competes with the company to its
detriment, a claim for usurpation of corporate opportunities may
arise.

Part 3: Unjust Enrichment: In cases of bad
faith actions benefiting one party to the detriment of another, a
claim for unjust enrichment may be warranted. It imposes an
obligation on the enriched party to prevent injustice, requiring
proof of enrichment at the expense of another.

Part 4: Breach of Contract: Operating
agreements or shareholder agreements often govern disputes between
partners. Breach of contract claims arise from violations of these
agreements, with considerations such as arbitration clauses and
legal fee provisions playing pivotal roles.

Part 5: Fraud: Fraud claims are common in
partnership disputes, alleging false representations made by a bad
faith partner. Elements such as material fact misrepresentation,
reliance, knowledge of falsehood, damages, and intent are
scrutinized in such claims.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.