Sometimes business partners that once worked well together may reach a point where they no longer see eye-to-eye. One or all partners may agree that it is time to end their association.
When the involved parties are on the same page, it is not overly difficult to terminate a partnership. If a partner resists, however, it could lead to a business “divorce” or civil litigation.
What is a business divorce?
Like a marital divorce, one that ends a business partnership is fraught with complications. You must divide your company assets, client lists and innumerable other pieces of business property. Hopefully, the governing documents of your partnership provide options for resolving disputes or severing the partnership outright.
For example, many partnership contracts contain clauses that allow one partner to buy out another. Still, the other partner must be agreeable. When they are not, your business divorce may involve civil litigation.
Litigation may also be necessary if your partner acted in a manner that harmed the company. Examples of such conduct include:
- Breach of fiduciary duty. Acting in a manner that places personal interests ahead of business or partnership interests.
- Breach of a partnership agreement. Violating one or more terms of the partnership contract.
- Abandonment of the business. Exiting the partnership in violation of the operating agreement.
- Negligence affecting the business. Neglecting their responsibilities or failing to act with the prudence a reasonable person would use in the same situation.
Learning more about Ohio business and civil litigation can help protect your company’s interests if your partnership is no longer effective. If you increase your knowledge, you may discover other ways to address the problem if you wish to avoid litigation.