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Can You Sue a Business Partner for Sabotage?

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By George Khoury, Esq. on May 03, 2017 11:58 AM

Despite the best intentions of business partners when a new venture gets going, unfortunately, sometimes partners do more than just drift apart. Sometimes a partner may intentionally or inadvertently sabotage a business for their own gain.

Even though business partners have the right to control the business, absent specific contractual terms, they will also have fiduciary and other legal obligations to each other. As such, if one partner is found to have sabotaged a jointly owned business, they can be liable to the other joint owners for the harms caused and can be sued.

Intentional Business Sabotage

Like the federal crime of sabotage, which generally relates to interfering with military activities, business sabotage occurs when an individual or entity intentionally interferes with another business's activities through destructive or fraudulent means. Frequently, state laws call this type of conduct "unfair competition" or "breach of a fiduciary duty."

If a business partner intentionally commits an act that causes the partnership harm, not only could they face civil liability, but if the act involved breaking criminal laws, they could face arrest and criminal penalties. Because of the nature of business partnerships, the harmed business partner may be exposed to third party liability created by their partner's acts of sabotage.

Contacting both the business's attorney and the police may be required to straighten these matters out, however, some third party liabilities created by acts of sabotage may not be avoidable by the business.

Types of Business Sabotage

Business sabotage can take many different forms, from financial crimes such as embezzlement to reputational harms such as the release of corporate or trade secrets. While frequently people consider sabotage to be acts committed by outside entities or individuals, when it comes to corporate espionage and embezzlement, businesses small and large are likely to be most vulnerable from those on the inside, including owners, partners, share holders, and particularly high level employees.

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