Starting a business with one or more business partners can be an exciting adventure. When you put your hard work, time, and hard-earned money and assets into a business with another person, you expect them to act fairly and treat you as well as you treat them. Unfortunately, however, that is not always how business relationships work out. Even family-owned businesses are not immune from allegations of business fraud. Finding out a close friend or family member has fraudulently taken money from your joint business endeavor can be both heartbreaking and financially devastating.
Business fraud can arise in every industry and in every type of business relationship. While the facts and details are always different, the common theme is usually that an individual or business entity intentionally deceived another party in order to gain an advantage. Anyone who is involved in business transactions can be at risk for business fraud. One of the most common types of business fraud in Texas is partnership fraud, also known as member fraud, joint venture fraud, corporate fraud, or co-owner fraud.
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Texas Business Law
The Texas Business and Organizations Code describes the law governing Texas business entities and when entities are formed, the formation documents can, by agreement of the people forming the business, create true fiduciary duties. Concerning corporations, the cases generally recognize that corporate directors owe the corporation a duty of obedience, a duty of care, and a duty of loyalty. The duty of loyalty that officers and directors owe to the corporation specifically prohibits them from misapplying corporate assets for their personal gain or wrongfully diverting corporate opportunities for themselves.
When a business partner begins engaging in conduct that is harmful to your business in some manner, you might be wondering what you can do. Minces Rankin PLLC handles litigation where a business partner, shareholder, investor, officer, or other business owner or member wrongfully misappropriates the funds or assets of a company that do not belong to them personally. Fraud can take place at any point during the business lifecycle, from formation through the daily course of regular operations to the sale or dissolution of an entity. The fraud related statutes in Texas sometimes allow the victim to obtain pre-judgment remedies that keep the fraudulent actor from disappearing with the property or money stolen.
Some of the most common reasons for business partner disputes include:
- Breach of partnership agreement: Many partnerships are formed by executing a formal partnership agreement. This contract will detail the duties, obligations, and rights of the business partners. If your business partner breaches a valid and enforceable partnership agreement, you can sue them for damages.
- Breach of fiduciary duty: Business partners owe each other a fiduciary duty to act in the best interest of the business, placing the partnership’s objectives above their own individual interests. When they fail to uphold their duties, business partners can be sued.
- Negligence: If your business partner did not act as a reasonable person would in similar circumstances and your business was harmed as a result, you may be able to sue them for negligence because they owe you and the business a duty of care to make decisions in good faith that will benefit the venture.
Our lawyers have years of experience drafting, negotiating, executing, and reviewing contracts across all industries, and we put this to work for you in analyzing your partnership dispute claims and formulating the best possible strategy to recoup your losses and obtain any available additional damages under the law.
Houston Business Fraud Lawyers
Fraud can ruin a business forever. The Houston partnership fraud and business fraud lawyers of Minces Rankin LLP help individuals, partnerships, corporations, and businesses recover their funds and assets and seek compensation for damages when a wrongdoer commits business fraud. If you need a Houston, Texas business litigation attorney, contact us today for more information on how we can help.