Listen up, friends! Here’s a shocker – when you start a business with someone, you become obligated to act in the best interest of your company, over your own individual interests. A fiduciary duty obligates you to act with care and loyalty towards your business partners and the company you own together.
In Ohio, fiduciary duties include
- the duty of loyalty
- duty of care
- and duty of good faith and fair dealing.
Read on for the DEETS about fiduciary duties.
Duty of Loyalty– The duty of loyalty means you and your partner must:
- Account to the company and fellow members for any profits received from conducting business or using business property
- Refrain from doing anything adverse to the company or as the Ohio revised Code puts it, “refrain from dealing with the company as an adverse party”, and
- Refraining from competing with the company.
The duty of care — means that you, as a member, must refrain from “engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of the law.” Gross negligence or recklessness means, in non-lawyer speak, really stupid and irresponsible. In other words, you fell waaaaay short of expectations..not just sloppy, or c- work, but “BIG FAT F” for FAILING.
The duty of good faith and fair dealing — means that you must deal with the company and your partners with honesty, with fairness and with good faith. Wear the halo, dude.
All of this sounds straightforward, but you would be surprised how often things go sideways. And, even if things are fabulous with your partners, it is good to have these boundaries in the back of your mind.
Uh-oh what’s happens when someone breaches their FIDUCIARY DUTY?!?!
Well, first, to establish a breach of fiduciary duty case, you must establish that there is an existence of a fiduciary duty, that it was breached, and that you or the company sustained damages.
Whether there is or isn’t a fiduciary duty is a matter of Ohio law and a matter of your governing documents. Understand both, preferably by way of a nice tidy explanation by your friendly lawyer. Or, uh, you could read the Ohio Revised Code yourself!
DAMAGES – Oooooh, the scary stuff from your worst litigation nightmares!!
In lawyer speak—various remedies may be available when your partner breaches fiduciary duties and you are damaged.
You may seek compensatory damages and punitive damages. Compensatory damages are meant to compensate you for what you lost and make you whole again.
Punitive damages are just what they sound like—punishment for the bad behavior. In Ohio they are capped at twice the amount of compensatory damages.
You may also seek an injunction, which is when you ask the court to instruct the bad partner to stop the behavior that is damaging you.
If you believe your partner is violating fiduciary duties owed to you, contact Wick Law Offices, LLC today, right now, STAT! We can answer your questions about fiduciary duty elements and help you determine a legal strategy to address your situation.
Call me! 614-572-6366. Email me! firstname.lastname@example.org.
Wick Law, LLC is a small business legal practice, representing owners, investors, and entrepreneurs in all aspects of commercial, corporate, and business law, estate planning, contracts and negotiations, business litigation, and real estate. For more information: Contact 614-572-6366, visit www.mwicklaw.com, or email us at email@example.com. Wick Law, LLC is located in Columbus, Ohio.
(Materials in this article have been prepared by Wick Law, LLC for general informational purposes only. This list is for educational purposes and is not to be considered exhaustive. More items could be added to this checklist based upon the type of transaction or industry standards. These materials do not, and are not intended to, constitute legal advice. The information provided is not privileged and does not create an attorney-client relationship with Wick Law, LLC or any of the firm’s lawyers. This checklist is not an offer to represent you. You should not act, or refrain from acting, based upon any information in this checklist. Wick Law, LLC maintains offices in Columbus, Ohio, and has lawyers licensed to practice in Ohio and in the United States District Court, Southern District of Ohio. The firm does not intend to practice law in any jurisdiction where the firm is not licensed.)
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