Causes of Action from Business Disputes

It can oftentimes be difficult to run a business with one or more partners.  Indeed, business partners typically have different visions about how a company should be managed, and partners may have disagreements about how much money partners should be paid from the business.  Although many business disagreements can be resolved without filing a lawsuit, it is sometimes impossible for business partners to resolve a dispute without resorting to litigation.  All told, there are certain causes of action during business disputes that can be presented during a lawsuit.

Breach of Contract

Most business partners have contracts among the partners that carefully delineate the rights and responsibilities between the parties.  Partnership agreements are typically comprehensive, and they usually spell out the investment partners will devote to a business, how profits will be distributed, and other matters.  If one partner breaches the partnership agreement, this can be one of the causes of action during business disputes that can be presented in a lawsuit.  Breach of contract matters are often the easiest claims to prove during a lawsuit.  However, it is important to draft a thorough partnership agreement in the first place to ensure that parties can be held accountable if they deviate from the expectations of other business partners.

Accounting

Sometimes, it can be difficult for a partner to learn about the full operations of a business.  This is especially true if one partner takes a minority role in the management of a business, or if a partner has departed from a company.  In addition to asking for monetary damages, another one of the common causes of action during business disputes is to request an accounting.  An accounting means that business partners must produce materials related to the business to the other partners.  This typically includes bank statements, balance sheets, invoices, and other financial records that can help a partner determine the financial situation of a business and how much money the business is making.  Unless a business partner has access to documents related to the business, it is important to ask for an accounting to have the materials necessary to make other claims against business partners.

Fiduciary Duties

Fiduciary duties can also form the basis of causes of action during business disputes.  A fiduciary is someone who owes a heightened duty to another because of the unique relationship they share with another party.  Many courts have found that business partners, especially in small companies, are fiduciaries of one another and owe each other certain duties.  This includes a duty of loyalty, which means that a business partner cannot freeze out another partner from the business.  In addition, business partners typically cannot do anything that might frustrate the other partner’s ability to earn money from a business.  Furthermore, business partners may owe a duty of care to one another, and usually cannot do anything that may waste the resources of the business.  All of these duties usually exist independently of any contract that may be signed between partners, so fiduciary duties commonly form the basis of causes of action during business disputes.

Tortious Interference

If business partners were involved in a company that served clients or customers, it is likely that a departing partner will want to take clients or customers away from the business.  Under certain circumstances, taking clients from a business can form the basis of causes of action during business disputes.  Oftentimes, individuals cannot unfairly interfere with the contracts and relationships that businesses might have with their clients and customers.  This conduct could affect the revenues generated by a business and the reputation of a company within the community.  Sometimes, business contracts explicitly allow partners to take clients with them when they depart from a company, and this could be a solid defense when defending against any claims of tortious interference.  However, in many business disputes, parties may try to claim tortious interference if one partner tries to take business away from a company.

Unjust Enrichment

Unjust enrichment is another one of the common causes of action during business disputes.  Unjust enrichment can be proved when a party shows that another party was unjustly conferred a benefit to which the other party should be compensated.  Oftentimes, unjust enrichment comes into play when there are no explicit contracts concerning a business arrangement.  This is because parties typically cannot recover for both unjust enrichment and breach of contract.  Courts oftentimes have a substantial amount of authority when a claim for unjust enrichment has been made, and it is often difficult to define the particular situations in which this cause of action may succeed.

However, if one party is taking more money from a business than they are entitled to take, this could give rise to a cause of action for unjust enrichment.  In addition, if one party is working more at a business than another party, but is being paid less, this may also be another situation in which a claim for unjust enrichment can be made.  Although the benefit that must be conferred in a claim for unjust enrichment is usually monetary in nature, other types of benefits can also give rise to a claim for unjust enrichment.

The Rothman Law Firm has substantial experience resolving business differences, and we understand the common causes of action during business disputes.  If you are looking for an experienced New York and New Jersey attorney that can help resolve a business dispute you are facing, please feel free to contact The Rothman Law Firm to request a free legal consultation.