If my business partner and I agreed that we will get paid evenly out of our business but he’s breached that agreement, what can I do?

UPDATED: Sep 30, 2022

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If my business partner and I agreed that we will get paid evenly out of our business but he’s breached that agreement, what can I do?

Recently I noticed that he has been paying himself and his wife considerably more without my consent. Before this he was cutting my pay because he told me the company does not have money. So now he can get paid more? We are 50/50 and my name is on all the personal guarantees. What should I do, is this legal?

Asked on December 1, 2015 under Business Law, Wisconsin


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

If there was a written document (e.g. a partnership agreement) setting out the terms of the agreement, then if he has breached it, you could bring an action for breach of contract to enorce the agreement and force him to return monies taken in violation of it.
Also, partners have a "fiduciary" relationship to each other: an obligation, imposed by law, to act honestly and faithfully in regards to each other (and to also exercise as much care with the other's money as they would with their own). You could also bring an action for breach of fiduciary duty, seeking a court order requiring him to account for funds, etc. he's taken or paid to his wife and to again amounts in excess  of what he should have taken.
If you uncover evidence that he did in fact steal or embezzle, you could sue him for theft as well, in addition to fililng charges.

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.

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