If your business partner doesn’t uphold their end of your agreement, it’s possible to sue them. However, you must check the law to know for certain, as there are numerous matters that impact this. In general, three reasons you could sue your business partner are negligence, breach of fiduciary duty, and breach of contract.
Texas law regarding partnership agreements allows you to sue your business partner if their actions harmed the partnership business, and a reasonable person in similar circumstances would not have taken those actions. Business partners owe each other and the business a duty of care under the law.
Breach of fiduciary duty
You and your partner also owe each other a fiduciary duty, which means you each must prioritize the partnership business’s interests over your individual interests. In some situations, you can sue for breach of fiduciary duty even without a written contract.
Breach of contract
Whenever you enter an agreement in business, you should have a written and signed copy of the terms of that agreement (or contract). This helps protect you if something goes wrong. However, you need to check the law when drafting a contract, too. When something in the contract isn’t in line with the law, the contract (or at least that portion of it) might not be valid. Similar to the previous situations, you may sue if your partner caused losses for the partnership business when they breached your contract.
Although the above are the most common reasons for suing a business partner, there are other less common reasons. For example, you might sue your business partner in Texas for abandonment if your partner leaves the business without following the correct procedure. Other available reasons depend upon the conduct of your partner.
Suing your business partner is usually a last resort choice to fix problems they caused for the partnership business. If you want to hold them responsible for negligence, breach of fiduciary duty, breach of contract, or otherwise, you must check the specifics of the law surrounding these issues to know if you can sue.