If a business partner spend business money on obviously personal items, can I take him to small claims court to get the money back?
Get Legal Help Today
Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption
If a business partner spend business money on obviously personal items, can I take him to small claims court to get the money back?
If I started a business with a partner, opened a business checking account in the business name with myself and my partner as signators on the account, can I take him to small claims court and for spending money on obviously personal items like thousands on jewelry for his girlfriend? The money in the account was from a real estate loan to work on apartments we had purchased. The personal items he bought are plainly listed on the bank statement with his card number.
Asked on June 8, 2012 under Business Law, Kentucky
Answers:
EMMANUEL SOCKS / Socks Law Associates, PLLC
Answered 12 years ago | Contributor
There must be ways of dealing with such acts internally, based on company regulations in the by-laws. Courts would not want to intervene in something that is part of someone's business judgment as an owner or executive. What appears to be the solution, based on what little information you have above, is to treat the personal expenditure as a withdrawal by a partner/member. Remove from expenses and debit the capital account for the partner/member.
If you want to sue in Court, will that be based on a breach of duty claim? What procedures do you have in place? Seek an attorney to help you flesh out the claims you can have, if any, and to put procedures in place to prevent recurring acts.
IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.