Legal Question in Business Law in Pennsylvania

Deceived by corporate partner

Began corporation in January 2001. Two partners 50% each. Did business for about one year. Had 4 retail locations. Gross income for 2001 was $240,000. In July 2002 my partner began a new corporation as the sole owner. He closed all existing bank accounts without my permission and transfered everything over to his new corporation, leaving the old corporation with nothing accept bills owed and taxes due. His current business with his new corporation is now booming.

Asked on 2/03/03, 12:06 pm

2 Answers from Attorneys

Philip Burnham, Esquire Burnham Law Group, LLC.

Re: Deceived by corporate partner

Usually a corporate officer owes a fiducuary duty to the corporation. It also depends on the position and level of authority of that officer.

Without knowing more, it appears that this person might have diverted business opportunities that belonged to the original corporation.

Also, sometimes there are contracts that would govern liability, like shareholder's agreements, employment contracts containing no-compete provisions or other agreements.

I would advise you to consult with an attorney to help you explore the issues. Good luck.

Read more
Answered on 2/03/03, 2:28 pm
Patrick Henigan Eckell Sparks

Re: Deceived by corporate partner

Generally corporate officers have a fiducuary duty to the corporation. Depending on exact facts, the duty may require that any business opportunity must be offered first to the corporation. The corporation itself may have an action against the departing partner, especially as it pertains to unauthorized changes in banking etc. Individually, your rights may be limited. Did you execute a shareholders agreement? How were tax returns handled. You need to consult with an attorney. Some attorneys will handle this type of matter on a contingency or mixed hourly/contingent basis.

Read more
Answered on 2/03/03, 12:56 pm

Related Questions & Answers

More Business Law questions and answers in Pennsylvania