Trust is the foundation of any business partnership, but when self-dealing occurs, the partnership can crumble, taking the business along with it.
Swift action empowers you to protect your interests amid business self-dealing. Several legal avenues may be available to address your concerns, end the misconduct and safeguard your company.
Recognizing self-dealing in a partnership
In a partnership, self-dealing occurs when a partner uses company resources or decision-making power for personal benefit rather than the business’s success. Common examples include:
- Using company funds for personal expenses
- Awarding contracts to businesses they own or have a stake in
- Inflating their own salary or bonuses without justification
- Diverting business opportunities for personal gain
- Manipulating financial records to obscure improper transactions
Identifying these behaviors early is crucial to preventing financial harm and maintaining trust within the partnership. Transparency and accountability are key to ensuring ethical business practices.
Fiduciary duties and steps to resolution
New York law imposes fiduciary duties on business partners, requiring them to act in good faith and prioritize the company’s interests. When they fail, the harmed partner can address the self-dealing and seek legal remedies.
Following these steps can open a pathway to closure:
- Review the partnership agreement for fiduciary duty provisions
- Demand financial records and an accurate accounting
- Consider filing a breach of fiduciary duty claim
- Request an injunction to prevent further misconduct
- Seek damages for company financial losses
You can also ask the court to dissolve the partnership. This may be an option if disputes or misconduct make further joint business operations impractical.
Experienced legal representation can help you enforce your rights and recover financial losses when a business partner places their own interests above the company’s.
