When two or more people engage in business for profit, with or without a formal written agreement, they are partners engaged in a general partnership. Partners have fiduciary duties to each other. Depending on the type of business relationship you have (limited or general) partnership, fiduciary duties will vary. In California, Corporate Code §16404 dictates the fiduciary duties of partners, along with any written terms of agreement between the partners. Fiduciary duties expose partners to liability when they fail to live up to their obligations.
If your business got to a point where you and the other partners fail to get along, the dissolution of your business can be as emotional as a divorce in family court. When you first enter into a business, you form an entity to limit your liability and save money on taxes. These advantageous benefits disappear when you decide to dissolve the business, but your liabilities will not.
When you decide to go into business with someone, you think about many things. It is great to have a partner, as two heads are better than one. Also, it is a much more exciting endeavor when you are working with a friend, and sometimes having a partner can also lead to an exponential increase in profits. This type of business arrangement, working with a friend or close acquaintance, is common in many businesses today.
Too often, unfortunate situations arise during the commercial sales of businesses. These situations arise frequently because sellers of businesses either actively misrepresent the facts surrounding the business or fail to disclose all the proper information to the prospective buyer.
Today, a majority of businesses rely on contracts to fulfill their day-to-day operations. When you sign a contract with another business or individual, you expect them to perform their end of the bargain or agreement. When a party fails to fulfill their end of the bargain or breaches the agreement, your business can quickly run into financial trouble, losing a significant amount of profit, time and resources.
Unfair competition has been a hot topic in the media since United Airlines and travel website Orbitz filed a lawsuit in late December against the 20-something founder of Skiplagged.com, a website which helps travelers find "hidden city" airline ticketing.
The purpose of contracts is to create a binding agreement for business transactions, but unfortunately, there are times when these are not upheld. Contracts can be disputed for their validity, enforceability, and meaning all of which can become complex. When there is a business contract dispute, an alternative resolution solution such as mediation might be suggested.
Per The Wall Street Journal, a trademark case that has been ongoing for the past 16 years has reached the Supreme Court. The basis of the case is built upon the fact that the names of the company, Sealtight and Sealtite, are phonetically similar, causing unfair competition. Sealtight alleges copyright infringement, stating that consumers are confused between the two brands and the products they sell. Is the company losing business due to this allegation? The Court is still deciding.
The term "fiduciary duty" is technical in nature, but in simpler terms, it covers the expectations between business partners to do the right thing when it comes to the working relationship. There are common duties associated with a fiduciary relationship which include duties of confidentiality, loyalty, and good faith.
Entering into a basic contract seems like it should be a simple black and white situation, but there are several factors involved in regards to business transactions. Disputes often arise when there are is question over a contract's meaning, validity, or enforceability. Contracts help protect both businesses and consumers by making an agreement legally binding.