Going into business with someone you can trust can be an exciting experience. After all, you share common goals and aspirations – growing your business and making profits. But what happens when you learn that your business partner is dishonest? What steps should you take to safeguard your interests?
It is not uncommon for a business partner to hide their true colors at the onset of the partnership journey and become dishonest down the road. And as you can imagine, this can be frustrating, to say the least. Fortunately, there is something you can do about this.
Understanding the types of partner dishonesty
In the context of a business partnership, dishonesty can take multiple forms. The most obvious one is theft. Here are partner actions that can amount to dishonesty:
- Theft of partnership assets like inventory
- Fraud and embezzlement
- Theft of intellectual property like software, recipe or customer database
- Breach of fiduciary duty
Depending on the nature of the dishonesty and the resulting implications, you may take any of the following steps:
- Dissolve the partnership: As expected, you will likely have a difficult time trusting your partner after learning about their dishonesty. Consequently, you may resolve to end the partnership per the provisions of the partnership.
- Expel the dishonest partner: If the partnership involved more than two parties, you may consider expelling the dishonest partner and moving on with the other partners. Again, this will be guided by the partnership agreement.
- Sue for damages: If a partner’s dishonesty leads to losses to the business, you may seek to recover damages. In this case, you may bring a civil lawsuit against the dishonest partner. Also, you may file criminal charges against them as well.
Not many things are as disheartening as being betrayed by a business partner. If your partner turns out to be dishonest, it is in your best interest that you take appropriate steps to protect your investment and reputation.