Business relationships are built on trust, responsibilities, and agreements between the people who own or manage a company. When someone with important responsibilities puts personal interests ahead of the business or other owners, the resulting dispute can cause serious financial damage.

In certain business relationships, Texas law may impose fiduciary duties. Whether those duties exist and what they require depends on the business structure, the relationship between the parties, and the specific facts involved.

Understanding fiduciary duties can help business owners recognize potential misconduct and take action before the problem becomes more serious.

A fiduciary duty is a legal obligation that may require one person to act in the interests of another person, a partnership, or a business under certain circumstances.

Depending on the relationship, these responsibilities may involve:

Not every business relationship automatically creates the same fiduciary duties. The existence and scope of those duties should be evaluated based on the business entity, governing agreements, and applicable law.

Fiduciary duties may arise in different business relationships.

Depending on the circumstances, they may involve:

The responsibilities of each person can vary significantly.

For example, the duties between partners may differ from those involving shareholders, officers, or members of a limited liability company.

If your dispute involves another business owner, read our article on Partnership Disputes in Texas What Business Owners Need to Know.

A breach may occur when someone who owes a fiduciary duty fails to comply with that responsibility.

Examples may include:

The specific facts matter. Conduct that creates liability in one business relationship may not necessarily create liability in another.

Financial misconduct is one of the most serious problems that can arise between business owners.

Warning signs may include:

If you suspect company money is being misused, preserving financial records and reviewing the governing business documents can become extremely important.

Self dealing generally refers to a situation where someone involved in managing a business participates in a transaction that benefits that person personally.

For example, a person may cause the business to enter into an agreement with another company that person owns or controls.

A transaction involving a personal interest is not automatically unlawful. However, failing to disclose the conflict or improperly using a position of trust for personal gain may create legal problems depending on the circumstances.

Disputes can also arise when someone takes a valuable business opportunity that arguably should have belonged to the company.

For example, an owner or manager might learn about a potential customer, investment, property, or business transaction through the company and attempt to pursue that opportunity personally.

Whether this creates a legal claim depends on the facts, the person’s duties, and the relationship to the business.

Documentation is often critical when investigating suspected misconduct.

Important evidence may include:

Business owners should preserve relevant records instead of deleting communications or modifying documents after a dispute begins.

Business disputes frequently involve more than one legal issue.

The same conduct may involve questions about fiduciary duties and a written agreement.

For example, a business agreement might establish rules regarding:

When someone violates those terms, a breach of contract claim may also need to be considered.

Read What Happens When a Business Contract Is Breached in Texas for more information about contract disputes.

The remedies available depend on the facts of the case and the legal claims involved.

A business or owner may seek recovery for losses caused by the alleged misconduct.

Depending on the circumstances, a court may consider issues involving:

The appropriate remedy depends on the nature of the duty, the conduct involved, and the resulting harm.

Not every fiduciary duty dispute has to proceed to trial.

Business owners may sometimes resolve disagreements through:

An early resolution can sometimes preserve business value and reduce litigation expenses.

However, court action may become necessary when the parties cannot reach an agreement or when immediate legal protection is needed.

You should consider obtaining legal guidance when you discover conduct such as:

Acting early may help preserve evidence and prevent additional financial damage.

For a broader explanation of these types of cases, read What Is Business Litigation in Texas and When Should You Hire a Lawyer.

A business litigation attorney can review the relationship between the parties and determine what legal duties may apply.

This may include reviewing:

An attorney can also help determine whether negotiation, litigation, or another form of dispute resolution is appropriate.

A possible breach of fiduciary duty can threaten the financial stability and future of a business.

These cases often involve complicated questions about ownership, management authority, financial transactions, and the responsibilities owed between the parties.

If you suspect that another owner, partner, officer, or manager has improperly used company money, information, or opportunities, reviewing the situation early can help you understand your rights and determine the appropriate next steps.

If you are involved in a business dispute involving suspected financial misconduct, conflicts of interest, partnership problems, or breach of fiduciary duty, The Law Office of Silverio Martinez can review your situation and explain your legal options.

Contact our office today to discuss your business dispute and learn how we can help protect your interests.