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Can a Business Partner Take a Commercial Opportunity for Themselves?

West Palm Beach Business Litigation Attorney 2023-01-26 16-49-13

What happens if your business partner decides to forgo an opportunity for the company and instead use it for themselves or one of their other businesses? Do you have any rights or options in Florida law? The answer is “yes”—though, the specific circumstances always matter, including the type of business you have, the nature of the commercial opportunity, and the terms of your partnership agreement. Here, our West Palm Beach partnership lawyer explains the key things to know about what happens when a business partner tries to take a commercial opportunity for themselves.

Florida Law Imposes a Duty of Loyalty on Business Partners 

Under Florida Statutes § 620.8404, business partners owe each other limited fiduciary duties. One of the core fiduciary obligations is the duty of loyalty. It is a principle that holds that partners should prioritize the partnership’s interests over their own. As such, seizing a commercial opportunity that could otherwise benefit the partnership, for personal gain, may be considered a breach of this duty on the grounds of a breach of duty of loyalty.

 Disputes Can Arise Over Exactly What Constitutes Competing Commercial Opportunity 

What constitutes a breach of the duty of loyalty on the grounds of usurpation of a commercial opportunity? It depends on a number of different factors. Partners may have differing perceptions about whether an opportunity could reasonably benefit the partnership or whether it falls outside the partnership’s scope of interest.

Beyond that, there may be differing views on the impact that a partner taking a specific opportunity for personal gain might have on the partnership. These complexities can often lead to conflicts. If you have questions about whether or not usurpation of a commercial opportunity is occurring/has occurred, an experienced Florida partnership lawyer can help.

 A Well-Drafted Partnership Agreement Can Make a Big Difference 

In order to avoid disputes, ambiguity, and other types of potential conflicts, it is imperative that you have a well-drafted partnership agreement. Among other things, the partnership agreement can outline the specifics of what constitutes a competing commercial opportunity and set the rules for partners exploring such opportunities outside the partnership.

Beyond that, the partnership agreement may also set out the mechanisms for resolving potential disputes, thereby preemptively managing the risk of litigation. Having a comprehensive partnership agreement is not just a matter of legality; it also cultivates trust, clarity, and mutual understanding within the partnership, which can significantly contribute to the long-term success of the business.

 Contact Our South Florida Partnership Dispute Lawyers Today

At Pike & Lustig, LLP, our West Palm Beach commercial litigation team has deep experience representing clients in complex partnership disputes. If you are locked in a dispute over a business partner taking a commercial opportunity for themselves, we are here to help. Contact us today to arrange your completely confidential, no obligation initial consultation. Our firm handles partnership disputes throughout Southeast Florida from our offices in West Palm Beach and Miami.



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