The first thing you do is make sure you keep everything as friendly as possible. It’s much easier and much less expensive to come to a resolution if your business partner and yourself are not fighting.
The next thing you should do is have a contract with your business partner. That’s an operating agreement, a shareholder agreement, or some type of written agreement that sets the boundaries of your business. I find litigation is much less often when there is a contract between the business partners. I recommend you have a professionally drafted one. If you just download something off the Internet or draft it on your own, you are going to miss provisions that will prevent a lawsuit.
Lawsuits in these types of cases are very expensive. A lot of times, the partner who has been stealing money is the one who will get the better end of the lawsuit because they have the means to either fight it or have taken the means away from the partner so that they cannot file a lawsuit. Again, the best thing to do is to stay as friendly as possible with your partner and draft a contract between you two which I find when there is a writing, will prevent litigation.
Mattleman, Weinroth & Miller, P.C., are experienced business attorneys in the state of New Jersey. If you have any questions regarding your business or would like legal advice on a particular matter, contact the office for your free initial consultation.