All relationships are forged on an element of trust. If there is a breach of trust it can lead to serious consequences, especially when it is a business partnership and involves money.
Your understanding of where you stand in this sort of scenario can often be enhanced when you access up-to-date legal resources such as lawalways. With this particular difficult topic, what are your options if you discover that a business partner has taken money out of the company without your consent?
Here is a look at your options in this challenging situation.
The legal status of your business can usually be a highly influential factor when it comes to the obligations of every person with control of the company.
If your business is a partnership, this is a specific legal relationship that is not unlike a marriage. Usually an agreement states that each partner takes on legal responsibility for the debts and obligations of the business.
If you have taken the prudent step of drawing up a partnership agreement when the business was formed you can seek redress for their actions. You do this by using the document to make them aware of their fiduciary duties.
Working on the assumption that you have a formal partnership agreement that covers the duties and actions of all those in the ownership and running of the business you should be able to refer to the contract for how partnership funds are used.
A typical contract will clearly outline when and how a partner can withdraw money from the business. It also covers what authority each partner needs to carry out that transaction.
You should be able to refer to that clause in the agreement when confronting the partner who has withdrawn cash without consent.
Even if you are understandably aggrieved and concerned that your partner has taken this course of action without consent the best way to approach the situation is to have an initial conversation about the circumstances. You should learn the reasons why they have taken the money.
This is a critical step when it comes to seeking redress for the money that has been taken.
It will usually help your legal position if you can demonstrate that you have had a conversation with the partner. Making them aware of their obligations can avoid legal action. And, having a record of formally asking them to pay the money back into the business is an important step if you end up taking legal action.
Make sure you back up any conversation with a written record of the discussion.
You should also send the partner a written demand that they repay the money taken from the business within a specific time frame.
It can be a very challenging time when you discover that there has been a breach of trust within your business. However, it is essential that you follow protocols for requesting the money back and talk to a legal professional if it becomes clear that the situation is not going to be resolved between yourselves.
