While it is possible to settle shareholder or partnership problems out of court, there are cases in which the courts must be contacted and help needed.
There are a few primary causes of action, or legal grounds, upon which civil lawsuits of New Jersey might be initiated when business partners or shareholders feel that litigation is needed to resolve a dispute. If you need help in resolving a business dispute in New Jersey, contact a commercial or corporate lawyer.
Common causes of litigation in partnership and shareholder disputes
Breach of contract
In business conflicts, the most typical cause of action is a breach of contract lawsuit. Contractual breaches for parties to a shareholder or partnership agreement may involve a variety of disputes about rights, responsibilities, and significant elements of the business.
You need to be aware of what is in your contract and what penalties are available for a breach, whether you are fighting against or pursuing legal action due to an alleged violation of the contract or just want to lower your chances of being sued in the future.
An educated lawyer may help you review your options in regard to your existing contract and reduce the likelihood of future legal action by carefully drafting shareholder agreements, partnership agreements, and other relevant contracts to make sure that the duties, procedures, and expectations of each partner are all properly stated.
The partners owed a fiduciary duty.
As the success of a partnership depends on trust that each partner will behave in the best interests of the company, business partners must act as fiduciaries and have responsibilities to the partnership, such as:
- Loyalty
- Truth and fair behaviour
- Sincerity
- Avoid self-dealing
- Full disclosure
What will you do if your business partner commits fraud?
Also, fiduciary duties keep majority shareholders and partners from committing fraud. In addition to bringing claims for violation of contract and fiduciary obligation, you might be able to establish fraud if you think a shareholder or business partner is stealing. Examples of business fraud include the following:
- Fraud, or purposeful distortion of information in order to cause uncertainty or worry.
- Misrepresentation, or giving false data with the appearance of being true.
What Is Business Partnership Tortious Interference?
Companies often depend on an intricate network of agreements and connections with many different people, including distributors, lenders, vendors, and agents. When someone unfairly interferes with one of these connections or involves a shareholder, partner, or another person that you have a contractual obligation to honor, you could be able to file a tortious interference lawsuit.
In addition to competitors and other third parties, present or previous partners who block current contracts or potential business opportunities may also be charged with tortious interference charges.
- Breaching confidentiality, non-compete, partnership, and shareholder agreements
- Client poaching
- Fraud or falsification.
Can you resolve a claim with an unjust enrichment claim for shareholder disputes?
In a business partnership, one party can sometimes benefit at the other’s expense. In the case that this occurs without a written agreement, unjust enrichment may be a suitable equitable remedy.
- Unjust enrichment claims have three components:
- A benefit received
- At the expense of the plaintiff
In cases when it seems unfair for the offender to retain the benefit without receiving equivalent compensation. Even though it is not a common claim, unjust enrichment could be a viable legal remedy in cases with no contract (and hence no basis for breach of contract) or fraud (since the defendant need only be in control of the plaintiff’s property or funds; no malice or intent is required). If an agreement existed but was void or unenforceable, there could be a basis for a claim.
If directors or majority shareholders of a company gathered revenue from it without sharing the gains equally with other owners or shareholders, then shareholders may be able to bring a lawsuit for unjust enrichment.