Three Reasons Why Your Business Partner May Have Breached Their Fiduciary Duty
A fiduciary duty is the highest standard of care in the American legal system. Described simply, a fiduciary duty requires a person or entity to act in the best interests of another party. Under Florida law (Florida Statutes § 620.8404), business partners have limited fiduciary duties. Specifically, you and your business partner owe each other:
- A duty of care; and
- A duty of loyalty.
You can take legal action against a business partner if you suffer financial damage because of their failure to live up to these fiduciary responsibilities. In this article, our Miami partnership dispute lawyer highlights three examples of conduct by a business partner that could justify a breach of fiduciary duty claim.
- Failure to Protect the Assets of the Partnership (Duty of Care)
As noted above, business partners owe each other—and the partnership as a whole—a basic duty of care. If a business partner violates this duty of care by negligently failing to protect the assets of the partnership, they could be held personally liable through a breach of fiduciary duty claim.
To be clear, there is no duty of competence or duty of skill for business partners in Florida. Poor business judgment by a business partner is not a breach of fiduciary duty. However, negligence that constitutes a failure to uphold the duty of care may be deemed a breach of fiduciary duty.
- Misappropriation of a Partnership’s Business Opportunity (Duty of Loyalty)
Beyond the duty of care, business partners in Florida owe each other a duty of loyalty. Among other things, this means that a person is restricted from taking personal advantage of a business opportunity that could be enjoyed by the partnership. For example, imagine that two architects formed a partnership and went into business together. A potential client approaches one business partner with an opportunity for a project. It would be a breach of fiduciary duty for that partner to try to get the potential client to hire them personally instead of hiring the partnership as a whole.
- Competing Directly Against the Partnership (Duty of Loyalty)
Beyond misappropriation of a business opportunity, it could also be a breach of the duty of loyalty for a business partner to compete directly against the partnership. An example would be two entrepreneurs forming a real estate investment partnership in South Florida. If one business partner entered into another competing partnership without disclosing that information, they may be liable for breach of fiduciary duty on the grounds of a violation of the duty of loyalty.
Contact Our Miami Partnership Breach of Fiduciary Duty Lawyer Today
At Pike & Lustig, LLP, our Florida commercial litigation attorneys have deep experience and experience in partnership disputes. If you have any questions about partnership law and breach of fiduciary duty allegations, we are available to help. Give us a call now or connect with us online to set up your strictly private case review. Our firm has law offices in Miami and West Palm Beach.