1. Include Specific Terms

To avoid any misunderstandings between the parties, it’s crucial to be as specific as possible when drafting contracts. This means that the contract terms should be clear and concise to ensure both sides interpret them in the same way. Ambiguous or vague language is one of the most common reasons breaches of contract arise. A well-drafted contract leaves no room for misinterpretation or confusion about each party’s expectations.

2. Ensure the Identities of the Parties are Clearly Defined

A common pitfall in drafting contracts is the failure to clearly define the parties to the agreement. While it might be obvious that the parties need to be identified in a contract, it’s essential to include any affiliates or subsidiaries as necessary to avoid confusion. Inaccuracies concerning the identity of the parties can cause a contract to be breached and rendered unenforceable.

3. Avoid Using Boilerplate Contracts

If you are a business owner, it’s important to have the guidance of a business law attorney when drafting contracts and entering into contractual arrangements. Contact Litico Law Group to schedule a consultation to learn how we can assist you.

While boilerplate contracts can serve as a template, it’s best to avoid using them for anything other than a guide. Clauses in boilerplate contracts are often too general and produce unwanted results. Every provision in a contract should be tailored to the specific transaction and meet the needs of the parties involved.

4. Ensure the Contract is Conscionable to All Parties

If a contract is too one-sided, it may be rendered unconscionable. When drafting contracts for your business, the terms must not only be fair to your company, but to the other party as well. Courts typically will not enforce a contract that is deemed unconscionable and this can be asserted as a defense in the event the agreement is breached.

5. Address Any Potential Issues That Could Arise

A good contract should anticipate and address any potential issues that could arise and outline the measures that should be taken to mitigate them. Provisions should be included regarding dispute resolution methods, termination of the agreement, and remedies for any breaches of contract that may occur.

6. Consider Changes That Could Occur During the Term of the Contract

If the terms of the contract will be carried out over an extended period of time, it’s critical to consider any contingencies that could arise during that period. By including provisions concerning any uncertainties, modifications, or amendments, you can ensure the agreement will be adaptable in the event circumstances change and mitigate risk.

7. Ensure the Contract is Legally Compliant

One of the most important — and overlooked — aspects of drafting contracts in business is ensuring they are legally compliant. Creating a contract that violates a federal, state, or local law can result in liability issues or in the agreement being invalidated as unenforceable. It’s also vital to ensure the contract is compliant with public policy, privacy laws, consumer protection laws, industry-specific standards, and various other regulations. In addition, if the parties are domiciled in more than one state, the contract should specify which jurisdiction’s laws apply.

8. Specify the Payment Terms Agreed Upon By the Parties

Issues with payment terms is a common dispute that arises in connection with contracts. When drafting contracts, include detailed payment information, including the amount that is owed, the schedule for the payments, and the agreed-upon methods of payment. You should also include any penalties or late fees charged for payments that are not made on time.

9. Seek Experienced Legal Counsel to Advise You

The best way to safeguard your business interests in a contractual relationship is to seek the counsel of an experienced business attorney. They will know how to draft an airtight contract that will help prevent disputes and avoid possible contract issues that could harm your business and its bottom line. A business attorney has the skill necessary to create a contract that is free from loopholes and meets the requirements for your specific circumstances.

Contact an Experienced Illinois Business Attorney

If you are a business owner, it’s important to have the guidance of an experienced business law attorney when drafting contracts and entering into contractual arrangements. Located in Rolling Meadows, Litico Law Group provides reliable representation to individual clients, small businesses, entrepreneurs, and corporate owners throughout Illinois for a wide array of business matters, including those involving contracts. We welcome you to schedule a consultation, contact us online or give us a call at 847-307-5942 to learn how we can assist you.

What is a Minority Shareholder?

A minority shareholder is one who possesses less than 50% of the shares in the corporation and no majority control over the operations of the business. In contrast, a majority shareholder has more than 50% of the shares in the company and power over the company’s decisions. While the majority shareholders have the most control in the company, minority shareholders still have certain rights and legal protections.

What are Minority Shareholder Rights?

Majority shareholders owe a fiduciary duty to minority shareholders to act in the company’s best interests. Although minority shareholders have less power than the majority shareholders, they still have certain legal rights. These include the right to receive profit distributions and review financial statements and corporate records.

Specifically, minority shareholders are entitled to the following rights:

• The right to notice of a shareholder meeting and voting rights — Minority shareholders who have voting rights must receive advance notice of shareholder meetings. They may also petition the court to require a meeting if the majority shareholders refuse to hold one.
• The right to inspect the corporation’s books and financial records — Minority shareholders may examine corporate records for a “proper purpose.” In other words, a minority shareholder may examine the books for the purpose of protecting the interests of the company. However, they must first make a demand on the company, identifying which records the shareholder wishes to inspect.
• The right to dissent and receive payment for shares — In some cases, a minority shareholder is permitted to dissent from a corporate action and receive the fair market value of their shares. These instances can involve any situations in which the corporate documents allow for shareholder dissent.
• The right to maintain a derivative action — When a company is harmed by a majority shareholder, officer, or director, a minority shareholder may bring a derivative action on behalf of the company. In order to do so, the minority shareholder must be able to show that they made a demand upon the company before filing suit and such demand was denied, or making a demand would have been futile.

A shareholder agreement can help safeguard minority shareholder rights. This document can give minority shareholders contractual rights beyond those provided by Illinois law. Another option companies may consider is weighted voting rights for certain issues — this gives the minority shareholders’ vote more weight than they would otherwise have based on the percentage of their shares.

What Legal Remedies Do Minority Shareholders Have?

While conflicts between majority and minority shareholders are not uncommon, those with a non-controlling interest may take legal action when their minority shareholder rights have been violated. Critically, shareholder oppression takes place when the majority shareholders of a corporation act in a manner that is fraudulent, illegal, or oppressive toward the minority shareholders. For instance, the majority shareholders might attempt to freeze out a shareholder and force them to sell their shares in the company at an unfair price. The majority shareholders might also deny the minority shareholders the chance to inspect the corporate records, fail to notify them about meetings, or misuse corporate funds.

Minority shareholders have legal recourse in cases involving wrongful behavior by the majority shareholders. A minority shareholder may be entitled to a statutory remedy if they can establish any of the following: (1) the controlling shareholders have acted illegally; (2) corporate assets have been misused; (3) shareholders are deadlocked when it comes to determining corporate affair management; or (4) shareholders are deadlocked regarding filling a board vacancy.

If you are a minority shareholder, it’s important to know your rights in the company. An experienced business law attorney at Litico Law Group can advise you of your rights and help ensure your interests are protected. Schedule a consultation and learn how we can help.

Depending on the facts and circumstances, relief under the Illinois Business Corporation Act can include:

• An accounting with respect to any matter in dispute
• The performance, alteration, prohibition, or setting aside of any action of the corporation or its shareholders
• Cancellation or alteration of any provision in the Articles of Incorporation
• Removal of any director or officer
• Appointment of any individual as a director or officer
• Appointment of a provisional director
• Appointment of a custodian to manage the business
• Payment of dividends
• Submission of the dispute to mediation or another form of alternative dispute resolution
• An award of monetary damages
• The purchase by the corporation of all the petitioning shareholder’s shares
• Dissolution of the company if no other sufficient remedy exists

Minority shareholders should take measures to protect their interests in advance. When negotiating the company’s shareholder agreement, minority shareholders should seek the right to appoint a board member, as well as veto rights for certain decisions. They should also consider the negotiation power afforded by the agreement. Importantly, minority shareholders should only enter into an agreement that clearly outlines their expectations.

Contact an Experienced Illinois Shareholder Dispute Attorney

If you are a minority shareholder, it’s important to know your rights in the company. An experienced business law attorney can best advise you of your rights and help ensure your interests are protected. Located in Rolling Meadows, Litico Law Group provides knowledgeable representation to shareholders, business owners, and entrepreneurs throughout Illinois for a wide array of business matters, including those involving minority shareholder rights. We welcome you to contact us by filling out our online form or calling 847-307-5942 to schedule a consultation to learn how we can assist you.

Not every limited liability company lasts indefinitely. No matter how much time and effort you put into building your business, there may come a time when you decide it’s the right time to close it. However, it’s important to understand that there are certain steps that must be followed when it comes to dissolving an LLC. Failure to complete the dissolution process and wind up the company’s affairs can ultimately mean the business continues to exist under Illinois law — leading to tax problems and liability issues in the future.

Reasons for Dissolving an LLC

When you file the necessary paperwork to start an LLC in Illinois, your business is officially registered with the state. But while you may have started the company with a purpose or specific vision in mind, there can be many reasons to close an LLC. To end the company’s existence and stop the state from recognizing it as an entity, you will need to go through the dissolution process and wind up the company’s affairs.

Specifically, the reasons for dissolving an LLC should be addressed in the company’s operating agreement. In the event the company is no longer profitable, or members cannot agree on important decisions concerning business operations, it might be time to close the company. Other reasons for dissolving an LLC can include disagreements concerning the future of the company or how to distribute profits. In addition, an LLC might also be dissolved due to the death of the owner, decreasing demand for the LLC’s products or services, or another reason that makes it impossible to run the business.

What are the Steps for Winding Up an LLC?

For effective LLC dissolution, seek guidance from Litico Law Group in Rolling Meadows. We offer dependable representation for various business needs across Illinois. Schedule a consultation and explore how we can help your business.

An LLC can’t simply be closed by shutting the doors of the business — there are specific dissolution and wind-up procedures that must be followed. If you’re considering dissolving an LLC, it’s vital to review the operating agreement. This document should address the LLC’s dissolution process and specify the triggering events that can lead to dissolution.

The steps in winding up an LLC include the following:

• Vote to dissolve the LLC — The first step that must be taken to dissolve an LLC is for the members to officially agree to close the company. In many cases, the operating agreement will specify how the vote will happen, when the meeting will occur, and how members will be notified regarding the vote. Under Illinois law, an LLC can be dissolved with a unanimous vote by all members.
• File final tax returns — As you close the LLC’s financial affairs, all required state tax returns must be filed, including the following if applicable: the Illinois Withholding Income Tax Return, the Sales and Use Tax Return, and the Corporation Income and Replacement Tax Return. The Illinois Secretary of State requires an LLC to obtain tax clearance before a company can be closed, showing that you’ve paid all taxes that are due. You will also need to file the required final federal tax returns.
• Inform creditors — Creditors of the LLC must be notified that the company is being dissolved. Illinois law also requires a minimum of five years notice be given to unknown creditors.
• Wind up business affairs — The wind-up process may look different for every business, depending on the type of operation. Typically, winding up includes satisfying remaining invoices, distributing employee severance packages, notifying customers, closing bank accounts, canceling any business licenses, and negotiating the remaining terms for any finance agreements. Steps must also be taken to settle any debts that are owed.
• Distribute remaining assets to members — Once taxes, debts, and other obligations have been paid, the remaining assets can be distributed to the LLC’s members. The operating agreement should specify how the funds are split.
• File Articles of Dissolution — The last step in closing an Illinois LLC is filing dissolution paperwork. In order to officially dissolve the LLC, an Illinois Statement of Termination must be submitted to the Secretary of State after winding up the business. However, an LLC must be in good standing to be voluntarily dissolved. The company’s status must not have been revoked or expired, and the LLC must not have been administratively dissolved.

LLC dissolution and completing the wind-up process can be complex — but it is necessary to ensure these procedures are carried out properly to avoid incurring liability and unintended consequences. Critically, as long as a company still exists, it must file annual reports, pay taxes, and satisfy its legal obligations. It’s essential to have a skillful business attorney by your side to help ensure you comply with the necessary requirements for closing your LLC.

Contact an Experienced Illinois Business Attorney

If you are considering dissolving an LLC, it’s important to have the guidance of an experienced business law attorney to help you navigate the process. Located in Rolling Meadows, Litico Law Group provides reliable representation to LLCs and entrepreneurs throughout Illinois for a wide array of business matters. We welcome you to contact us by filling out our online form or call 847-307-5942 to schedule a consultation to learn how we can assist you.

What is Self-Dealing?

Self-dealing occurs when a fiduciary acts in their own best interest while conducting a business transaction, rather than in the interest of the business. In other words, the individual who self-deals is essentially on both ends of the transaction and disregards their duty of loyalty to the company. One of the most common examples of self-dealing is using business resources for a direct personal benefit.

There are many different ways self-dealing can arise. Other examples of self-dealing can include the following:

If you have been accused of self-dealing, or your company has been financially harmed by it, contact an experienced business litigation attorney at Litico Law Group. We can advise you regarding your options and help you achieve a successful outcome.

• Using company funds for a personal loan
• Engaging with a connected company without making proper disclosures
• Failing to share knowledge of a business opportunity with partners
• Seizing corporate opportunities for a personal benefit
• Diverting corporate opportunities
• Engaging in a transaction that involved company assets and receiving a kickback
• Paying oneself an excessive amount of compensation
• Insider trading
• Using corporate assets to pay for personal expenses
• Purchasing a controlling interest in a competing company

For those who do not have a direct fiduciary duty, self-dealing can also refer to situations where a person buys or sells stocks before relevant information is made public.

Is Self-Dealing Ever Permitted?

The business judgment rule acknowledges that there are risks when it comes to making business decisions. This rule insulates corporate directors and other fiduciaries from liability for making decisions on behalf of the company, as long as they were made in good faith. However, it is important to understand that the rule does not protect corporate officers and other fiduciaries from liability when it comes to self-dealing. Fiduciaries must act in good faith at all times and disclose any conflicts of interest.

Nevertheless, engaging in a conflict of interest may not always lead to liability. While the fiduciary duty of loyalty prohibits self-dealing, it may be permitted in limited instances where the conflicting transaction has been fully disclosed and approval has been given by the other partners or shareholders. Self-dealing is also allowed if the fiduciary can show that the transaction was fair to the company and its shareholders. While it’s best to avoid self-dealing entirely, a transaction involving a conflict of interest can be cured subsequently through ratification — this means obtaining approval from the disinterested shareholders after the transaction has already been completed.

When Does Self-Dealing Constitute a Breach of Fiduciary Duty?

Self-dealing can have a substantial economic impact on a company. If an LLC member, corporate officer, director, or other party in a fiduciary relationship engaged in self-dealing, it may constitute a breach of fiduciary duty. In such cases, the party could be held responsible for any harm they caused the company or its shareholders to suffer as a result.

There are a number of both legal and equitable remedies that a court may impose in cases involving self-dealing. For instance, a court may order an award of compensatory damages, disgorgement of profits, a constructive trust, or an injunction to prevent further harm. A judge might also order the appointment of a receiver or order an injunction that requires the fiduciary to take certain actions.

Disputes involving self-dealing don’t always need to be resolved in litigation. In some cases, alternative dispute resolution methods such as mediation or arbitration can successfully resolve business conflicts involving self-dealing and other breach of fiduciary duty matters. These methods can offer a flexible, cost-effective, and efficient way to settle business disputes outside the courtroom with less disruption to business operations.

Contact an Experienced Illinois Business Attorney

If you have been accused of self-dealing, or your company has been financially harmed by it, an experienced business litigation attorney can advise you regarding your options and help you achieve a successful outcome. Located in Rolling Meadows, Litico Law Group provides reliable representation for a variety of business and corporate matters throughout Illinois. We welcome you to contact us by filling out our online form or calling 847-307-5942 to schedule a consultation to learn how we can assist you.

Types of Employment Contracts

An employment contract is a document signed by an employer and employee that helps to ensure both parties fully understand their obligations. This type of contract will typically include terms regarding an employee’s job title, compensation, benefits, time off, causes for termination, disciplinary procedures, and company policies. Critically, employment contracts should be specifically tailored to the job and the workplace setting.

There are a variety of employment contracts a business may use, including the following:

• Severance agreements — These contracts are entered into upon separation from the company and detail the rights and responsibilities of both parties, along with any benefits to which an employee may be entitled.
• Non-compete agreements — A non-compete agreement can help to protect an employer’s trade secrets and business interests by preventing an employee from working for a competitor company upon separation. Under Illinois law, these agreements are void unless an employee receives adequate consideration and there is no undue hardship placed on them.
• Non-solicitation agreements — A non-solicitation agreement is a contract in which an employee agrees not to solicit a company’s customers or clients for their own benefit after separating from the company. Similar to non-compete agreements, these contracts are only enforceable if they are reasonable and comply with Illinois law.
• Non-disclosure agreements — A non-disclosure agreement is a contract that can prohibit an employee from disclosing certain classified information that they acquire during the course of their employment.
• Confidentiality agreements — A confidentiality agreement is a type of employment contract that is often used when an employee has access to proprietary information.
• Fixed-term contracts — A fixed-term contract is an employment agreement that specifies a start and end date. These contracts are often used for short-term employment and seasonal employment situations.
• Consulting agreements — A consulting agreement is a contract that is used when two parties engage in a business relationship while one party is an external consultant to the other.
• Freelance contracts — A freelance contract is a document that outlines the terms and conditions of a project between a freelancer and client. Not to be confused with an employment agreement, freelancers are not employees. Rather, they are self-employed individuals who do not receive employment benefits from the company with which they have contracted.

Employment contracts can be complex documents — whether you are the employer or employee, it’s essential to be aware that every type of employment contract comes with significant legal implications. An employment contract attorney can help ensure you fully understand the terms, conditions, and ramifications before entering into any agreement.

Employment Contract Disputes

From negotiating severance agreements to drafting employment contracts and confidentiality agreements, it’s important to have a business attorney with the knowledge and skill necessary to ensure your interests are protected. We welcome you to contact us to learn how we can assist you and your business.

Once an employment agreement is in place, both parties must abide by the terms. Even though Illinois is an at-will employment state, if a contract sets forth certain conditions (such as compensation or a specific length of employment), an employee may be entitled to recover their damages in the event the terms were breached by the employer. In addition to conflicts concerning termination, employment contract disputes can arise for a variety of other reasons. For example, if an employee fails to adhere to the terms of a non-compete or non-solicitation agreement, an employer may be able to hold them legally liable for the damages they suffered as a result.

Whether an employer deviated from the terms of the contract or an employee wrongfully disclosed trade secrets in violation of a non-disclosure agreement, it’s vital to have an attorney who can skillfully assess your case to determine the best course of action. In some cases, a form of alternative dispute resolution such as mediation or arbitration can be used to resolve your matter without the time and expense of litigation. However, if an agreement cannot be reached, litigation may be the only option to resolve the dispute.

Contact an Experienced Illinois Business Attorney

If you require assistance with an employment contract matter, it’s critical to have an experienced business attorney on your side who can advise you regarding your rights and protect your financial interests. Located in Rolling Meadows, Litico Law Group assists clients with a broad scope of business law matters in Illinois. We welcome you to schedule a consultation, contact us online, or give us a call at 847-307-5942 to learn how we can assist you.

From conflicts with partners to breaches of contract, every business owner can expect to encounter a dispute at some point. Legal disputes involving your company can be costly and time-consuming — and it’s important to identify and address these matters as soon as they arise. While a knowledgeable business dispute attorney can answer your questions based on your specific circumstances, the following are some of the most frequently asked questions when it comes to business conflicts:

1. What Are the Common Types of Business Disputes?

Business disputes can encompass a wide range of conflicts. Disputes can occur across various industries between partners, with vendors, employees, and even clients. Common disputes can include breaches of contract, shareholder disputes, intellectual property disputes, financial disagreements, breaches of fiduciary duty, and issues involving fraud or misrepresentation. Business conflicts can also arise in connection with non-compete agreements, non-solicitation agreements, deceptive trade claims, real estate issues, and compensation matters.

2. How Do I Know if I Need a Business Dispute Law Firm?

As a business owner, you shouldn’t wait until a dispute occurs to contact a business law firm. Not only can a good business litigation attorney assist you in the event of a conflict, but they can provide crucial guidance for a wide variety of business matters at every phase of your company’s development. A business attorney can also help ensure you have the appropriate mitigation measures in place to avoid disputes before they arise.

3. Are There Ways To Resolve a Business Dispute Without Going to Court?

If you are facing business disputes, you need an experienced attorney by your side who can advise you regarding your options and assist you with achieving a successful outcome. Litico Law Group provides skillful representation to business owners and entrepreneurs throughout Illinois.

Although it is sometimes unavoidable, litigation is not always necessary to resolve business disputes. There are several ways business owners may resolve their disputes without going to court. Mediation, arbitration, and negotiation are all forms of alternative dispute resolution that can be used to resolve conflicts outside the courtroom efficiently and cost-effectively. In addition, these methods of resolving disputes can also provide business owners with privacy and allow them to have more control over the outcome.

4. How Do I Know When I Should File a Lawsuit?

If you are facing a business dispute, a skillful business dispute attorney can assess your case and determine whether it is in your best interests to file a lawsuit. It’s typically a good idea to attempt to resolve a dispute before resorting to litigation — but if settlement talks fail or the other party is not willing to negotiate, it may be necessary to pursue a claim in court.

5. How Long Does It Take To Resolve a Business Dispute?

Every business lawsuit is different. The amount of time it will take to resolve a business dispute can depend on the complexity of the issue, each party’s willingness to settle the matter, and whether the conflict goes into litigation. If a business dispute is resolved in litigation, the timeline will depend upon the amount of discovery that must be conducted, the court’s calendar, the number of witnesses in the case, and various other factors.

6. When Is an Injunction Available in a Business Lawsuit?

There may be a wide variety of remedies available in a business lawsuit, depending on the facts of your case. In addition to monetary damages, you might also be entitled to equitable remedies, such as injunctive relief. Specifically, an injunction is a court order that prohibits a party from acting in a particular way where money damages would not be an adequate remedy.

7. If Litigation Is Anticipated, Can I Do Anything To Increase the Chances of a Successful Outcome in My Business Dispute?

In the event litigation is anticipated in a business dispute, there are a few things you can do to increase the chances of a successful outcome. Significantly, you should consult with a knowledgeable business dispute lawyer who can advise you regarding your legal rights and remedies as soon as possible. They can evaluate your case and inform you regarding the documentation and evidence you will need to help establish your claim. You may also need to notify your insurance carrier and limit your communication with the other party.

8. What Are My Remedies if Someone Breaches a Contract With Me?

A breach of contract is a serious matter that can significantly impact a company’s bottom line. The law provides several remedies for breach of contract matters. Depending on the facts and circumstances of the case, remedies can include canceling the contract, monetary damages, or restitution. Other remedies can include an injunction or specific performance of the other party’s contractual obligation.

9. Can I Still Sue for Breach of Contract if the Company That Owes Me Money Dissolved?

If a company that breached a contract with you owes you money, you may still be able to sue even if it has closed. Critically, if the company failed to dissolve properly, its legal existence has not ended — and you might still be able to pursue a claim against it. These situations can arise if the wrong forms were filed, creditors were not notified, or wind-up procedures were not carried out properly.

Contact an Experienced Illinois Business Dispute Attorney

If you are facing a business dispute, it’s crucial to have an experienced business litigation attorney by your side who can advise you regarding your options and assist you with achieving a successful outcome. Located in Rolling Meadows, Litico Law Group provides skillful representation to business owners and entrepreneurs throughout Illinois. We welcome you to contact us by filling out our online form or calling (847) 307-5942 to schedule a consultation to learn how we can help.

Illinois law provides crucial protections to both businesses and consumers to help ensure they are safeguarded from deception, fraud, and concealment when it comes to trade and commerce. The Uniform Deceptive Trade Practices Act limits the use of deceptive trade practices during the course of business. Under this statute, a party who has been injured as a result of a deceptive trade practice can pursue a legal claim against the offending business.

What is the Uniform Deceptive Trade Practices Act?

Deceptive trade practices can significantly harm a business and its bottom line. The Uniform Deceptive Trade Practices Act is a statute that is meant to protect consumers by limiting the use of misleading, confusing, or deceptive trade practices in business. The Act specifically prohibits deceptive acts and the use of unfair practices in commerce, including those involving the use of fraud, misrepresentation, and omissions of material facts.

Acts that constitute deceptive trade practices can include things like a car dealership representing a damaged vehicle as new or tampering with odometers. Other examples of prohibited acts can include falsely labeling food products, making inaccurate claims about services, or engaging in any advertising that could be misleading to the public.

Under Illinois law, a party engages in a deceptive trade practice when they do any of the following:

• Pass off goods or services as those of another
• Cause a likelihood of confusion or misunderstanding regarding the source, sponsorship, approval, or certification of goods or services
• Cause a likelihood of confusion or misunderstanding when it comes to the affiliation, connection, association with, or certification by another
• Use deceptive representations or designations concerning the geographic origin of goods or services
• Represent that the goods or services have sponsorship, approval, characteristics, uses, ingredients, quantities, or benefits that they do not have
• Represent goods as original or new when they are deteriorated, altered, reclaimed, reconditioned, used, or secondhand
• Represent that the goods are of a particular standard when they are of another
• Disparage the goods, services, or business of another by making misleading representations of fact
• Advertise goods or services with the intent not to sell them as advertised
• Advertise goods or services with the intent of not supplying reasonable public demand, unless the advertisement specifies there is limited quantity
• Make false or misleading statements of fact regarding the reasons for, existence of, or amounts of price reductions
• Engage in any other conduct that creates a likelihood of confusion or misunderstanding by consumers

The Attorney General or state attorneys can take action against a business that committed a violation of the Deceptive Trade Practices Act. In addition, a party that has been harmed by any of the above actions in violation of the Act may be entitled to pursue a civil action to recover their damages.

What Remedies Can a Party Pursue for a Deceptive or Fraudulent Act?

Illinois law allows a party who was injured by another’s deception, fraud, misrepresentation, or concealment of facts while conducting trade to recover their damages. The intent to deceive does not need to be proven under the Deceptive Trade Practices Act — a victim may take legal action even if the misrepresentation was made innocently. It is also not necessary to prove competition, actual confusion, or misunderstanding to prevail in a claim under the Act.

A party who is likely to be damaged by the deceptive trade practice of another may be granted injunctive relief by the court to limit the confusion and misunderstanding as to the source of the goods or services at issue. Critically, a victim of a deceptive trade practice does not need to establish actual proof of monetary damages or loss of profits to prevail in a claim. Attorneys’ fees and court costs may be awarded in cases where the court finds the defendant willfully engaged in a deceptive trade practice.

When Does the Deceptive Trade Practices Act Not Apply?

While the Deceptive Trade Practices Act applies to a wide range of deceptive and fraudulent business acts, there are certain cases in which it would not apply. Under the statute, the Act does not apply to conduct that is in compliance with the rules of a federal, state, or local governmental agency. It also does not apply to the dissemination of information by publishers, broadcasters, printers, or other such parties who have no knowledge that the material is deceptive.

Contact an Experienced Illinois Business Attorney

If you are facing a deceptive trade practices claim, you may be entitled to take legal action against the wrongdoer. However, these cases are often complex and it’s essential to have a skillful attorney by your side who can assist you with navigating the legal process. Located in Rolling Meadows, Litico Law Group serves the needs of business owners and entrepreneurs throughout Illinois for a wide variety of legal matters, including those involving the Deceptive Trade Practice Act. We welcome you to contact us or give us a call at (847) 307-5942 to schedule a consultation to learn how we can assist you.

Members of a Limited Liability Company (LLC) owe certain fiduciary duties to the LLC and each other under Illinois law. Among the most important are the duties of care and loyalty. Unfortunately, LLC members can sometimes violate their fiduciary duties to the company by placing their own interests above the interests of the company or other LLC members. It’s vital for LLC members to fully understand their obligations — and the repercussions of breaching these duties.

What is an LLC Member’s Fiduciary Duty?

A fiduciary duty is a legal obligation that requires an LLC member to act in the best interests of the company. In a member-managed LLC, all members owe a fiduciary duty to one another since they all have input regarding the LLC’s operations. In contrast, in a manager-managed LLC, one member — the manager — is responsible for handling the operations of the company and owes a fiduciary duty to the other members.

Specifically, the fiduciary duties of LLC members help to ensure all members or managers of an LLC put the interests of the LLC above their own. These duties include both the duty of loyalty and the duty of care, as well as the duty to refrain from competing with the LLC and the duty to act fairly toward the company.

What is the Duty of Care?

The duty of care is a fiduciary duty that requires the LLC members to act in good faith, with the same level of care that a reasonably prudent person would set forth when fulfilling their obligations to the company. For example, an LLC member is expected to be thoughtful and prudent when purchasing property and advising other members. As long as an LLC member complies with the duty of care, they would likely be protected from liability in the event the deal did not work out.

Pursuant to the duty of care, an LLC member may not:

• Engage in intentional or reckless conduct
• Engage in grossly negligent conduct
• Knowingly violate the law when it comes to the LLC

Significantly, an LLC member’s duty of care and good faith also extends to wind-up situations. In such cases, they must still act fairly to the LLC, even if they have adverse interests. An LLC member must not compete with the interests of the company until the LLC has been dissolved.

What is the Duty of Loyalty?

Simply put, the duty of loyalty requires that an LLC member put the interests of the company above their own. An LLC member must not only account to the LLC, but they must also not engage in any conflicts of interest when it comes to their own financial interests and the company’s objectives. In addition, an LLC member may not use the LLC’s property for their own personal use — or capitalize on an opportunity that would benefit the LLC for their own economic gain.

In other words, an LLC member must act honestly, avoid conflicts of interest, and not take advantage of the LLC’s business opportunities for themselves. In some instances, an LLC member may be permitted to receive a personal benefit, as long as they’ve disclosed the deal and received approval from the LLC.

What Happens if an LLC Member Violates Their Fiduciary Duties?

Breaching a fiduciary duty can come with serious consequences. If it can be established that an LLC member breached their fiduciary duty, the LLC may be entitled to recover monetary damages to compensate for things like loss of business opportunities, loss of profits, and the wrongdoer’s unjust enrichment. In cases where fraud or egregious conduct can be shown, a court might award punitive damages — this category of damages is meant to serve as a deterrent to others and punish the defendant. A judge might also impose equitable remedies in cases involving an LLC member’s breach of duty of care or loyalty, such as an injunction or the appointment of a receiver.

Can an LLC Member Waive Their Fiduciary Duties?

As of 2017, the Illinois Limited Liability Company Act permits LLC members to waive their fiduciary duties or eliminate them, except for the duty of care. However, this must be specified in the operating agreement using clear and unambiguous language. An operating agreement may also alter the duty of care — but it may not authorize a violation of the law or intentional misconduct.

Contact an Experienced Business Law Attorney

If you are facing an LLC breach of fiduciary duty claim, it’s crucial to have the guidance of an experienced attorney. Located in Rolling Meadows, Litico Law Group serves the needs of LLCs and LLC members throughout Illinois for a wide variety of legal matters. We welcome you to contact us or give us a call at (847) 307-5942 to schedule a consultation to learn how we can assist you.

When you own a small business, nothing is as important as your bottom line — and when clients or other parties owe you money, it can significantly impact the success of your business and your cash flow. While small businesses may not have the same resources as larger companies and corporations to collect a debt, there are still a number of strategies you can utilize to enhance your debt collection strategies.

Here are several debt collection practices to implement in your small business:

Review Your Invoices

In some cases, clients may not have made payment simply because your invoices may not have specified that payment is due within a certain number of days. Be sure to include an invoice date, the contact information for both parties, and the payment terms on your invoices. You should also specify what payment methods are accepted, along with an itemized list of the goods or services you provided. In addition, as part of your debt collection strategies, you might want to reconsider how often you bill clients — depending on your cash flow, you might send invoices monthly or bimonthly.

Consider Implementing New Invoicing Technology

If you’re using excel spreadsheets or Word documents to generate invoices, you may think about shifting your practices to using new invoicing technology. By using certain types of technology, you can minimize the risk of error, save time, and be more efficient in your invoicing practices. These programs can also deliver invoices automatically and follow up regarding unpaid invoices.

Streamline Your Payment Process

Sometimes, late payments can be due to a small business’s payment process. If the procedures are confusing, clients and other businesses may simply push off making payments. Streamline your payment process by establishing clear procedures and offering different payment options, such as credit card payments, online payments, or check.

Determine How You Will Handle Clients Who Are Consistently Late

Every small business has at least one client who is consistently late in their invoice payments. This can place a burden on your cash flow. While you might make exceptions for some clients and extend the payment terms, you may sometimes need to implement stronger debt collection strategies and penalties for late payments. In addition, you might want to offer stronger incentives for early payment, such as an early pay discount. It’s best to follow up immediately with clients concerning any late payments.

Take Proactive Measures Before Working With Another Business

Small businesses that are conducting business with another entity should do their diligence before entering into any contract. For instance, it’s a good idea to look into a company’s debt history and identify any warning signs that indicate there will be a problem with getting paid in a timely manner. You should also conduct a reference check to learn more regarding how the business handles accounts.

Be Sure to Keep Good Records

When you’re attempting to collect a debt that is owed on a past-due account, you should record each collection attempt. As part of your debt collection strategies, it’s essential to keep good records of each date you contacted the client, including details about the call or other type of collection effort. Retain copies of all payment reminders, past due payment notices, final notices, and demand letters. In the event it is necessary to take legal action, these documents can serve as crucial evidence in your case.

Enter Into a Settlement

In certain situations, the best option to collect payment is to enter into a settlement with the client. If the client or other company with whom you are conducting business is not financially capable of paying the full invoice amount, offering to settle for a small amount can ensure you collect at least some of the debt owed. You may also consider agreeing to a payment plan to collect the debt over time.

Know What Debt Collection Tools Are Available

Small business debt collection strategies can include sending reminder emails, making phone calls, sending demand letters, and negotiating. But if all else fails when it comes to collecting a debt owed to your small business, you might need to consider hiring a debt collection agency, using the small claims court process, or filing a lawsuit. While each method can result in your business incurring additional expenses, the cost may be well worth it depending on the amount you are owed and the likelihood of success in collecting it.

However, it’s just as important to know what types of actions you legally cannot take to collect a debt — the Fair Debt Collection Practices Act imposes strict communication guidelines. It also prohibits collection practices that constitute harassment. It’s a good idea to consult with an experienced business attorney when it comes to the debt collection strategies you should implement.

Contact an Experienced Illinois Business Attorney

If your small business is facing debt collection issues, a knowledgeable Illinois business law attorney can help you implement effective debt collection strategies. Located in Rolling Meadows, Litico Law Group serves the legal needs of small businesses, LLCs, and corporations throughout Illinois for a wide variety of business matters. We welcome you to contact us or give us a call at (847) 307-5942 to schedule a consultation to learn how we can assist you.

The process of selling or purchasing a business can be complex. While there are many legal documents that may be involved in the transaction, the terms, conditions, and provisions that go into a business purchase agreement are critical. Whether you’re the buyer or seller, a well-drafted purchase agreement can protect your interests, safeguard your legal rights, and ensure a smooth transaction.

When it comes to buying or selling a business, there’s a lot at stake — and it’s important to have an experienced business attorney who can help you navigate this complicated process. At Litico Law Group, our legal team has extensive knowledge regarding business acquisition matters, and is committed to helping business owners meet their objectives. From small companies to franchises and large commercial operations, we possess the insight, knowledge, and experience necessary to assist you every step of the way.

Skillful Counsel for Business Sales and Acquisitions

Selling or purchasing a business can often feel overwhelming. If you’re the seller, you must ensure you’re adequately compensated for the asset you’ve worked so hard to build. In the event you’re looking to purchase a business, it’s crucial to make certain you fully understand not only the advantages, but also the potential liabilities involved. The attorneys at Litico Law Group provide comprehensive legal services to entrepreneurs and prospective business owners to help them avoid the pitfalls that can arise during a business purchase transaction — and maximize their financial benefits.

At Litico Law Group, our trusted attorneys provide representation to both buyers and sellers for business acquisitions. We assist clients with all aspects of a pending business purchase or sale, including the following:

• Drafting a letter of intent
• Drafting purchase and sale agreements
• Negotiating the terms of a purchase agreement
• Ensuring the purchase agreement is legally sound
• Working with business appraisers to obtain an accurate valuation
• Procure any necessary documentation
• Conducting due diligence
• Representing our client’s interests at closing

Our legal team can also provide a risk assessment, advise you regarding the potential risks, and develop strategies to minimize them. Litico Law Group has the expertise, insight, and acumen to handle even the most complex business purchase transactions. Offering personalized attention to every client, we take the time to gain a deep understanding of your objectives and work closely with you to identify your needs.

Knowledgeable Counsel for Reviewing, Drafting, and Negotiating Purchase Agreements

No two businesses are alike — and your purchase agreement should be specifically tailored to meet your unique needs. A business purchase agreement shouldn’t be boilerplate. Rather, the terms should be carefully negotiated and customized to avoid unintended legal consequences and potentially devastating financial outcomes. At Litico Law Group, we work diligently to create and negotiate purchase agreements that not only safeguard your rights at the closing table, but will also protect your long-term interests.

A solid business purchase agreement is vital to your business and its bottom line. It outlines the terms and conditions of the deal to which the parties are agreeing and can be highly nuanced. Specifically, the content of a well-drafted business purchase agreement should include detailed provisions regarding the following:

• The financial terms regarding the transfer, including the purchase price, the deposit amount, and other details
• A description of the assets that are being transferred, such as physical assets, equipment, intellectual property, customer lists, etc.
• Warranties, representations, and contingencies
• A confidentiality agreement and non-disclosure provision
• Non-compete and non-solicitation covenants
• Details regarding how the transfer of ownership should be carried out
• Liabilities assumed by the buyer
• A provision regarding third-party brokers, if applicable
• The closing logistics

The terms, conditions, and provisions in your business purchase agreement can have ramifications on your company for years to come. It’s essential to have a skillful business attorney by your side who can negotiate, review, and draft a purchase agreement that will help ensure the transaction is successful and your business goals are satisfied. When you work with Litico Law Group, you can be confident in knowing you have discerning counsel on your side who is dedicated to negotiating a fair deal — and securing the best possible terms regarding the purchase or sale of your business.

Contact an Experienced Illinois Purchase Agreement Attorney

If you are considering buying or selling a business, an experienced business attorney can advise you throughout the process, work with you to mitigate risks, and create a strategy for success. Located in Rolling Meadows, Litico Law Group offers high-quality legal services to individuals, entrepreneurs, and business owners in Illinois for a wide variety of business matters. We welcome you to contact us or give us a call at (847) 307-5942 to schedule a consultation to learn how we can assist you.

When a multi-member LLC is formed, members usually have the best intentions. But disputes can sometimes arise when members don’t agree on how the business should be operated — or members with a controlling interest engage in conduct that is oppressive to the minority members. Conflicts can also occur when a controlling LLC member excludes the minority members from management decisions or distributions are withheld. In cases involving a controlling member’s abuse or wrongdoing, a minority member may be entitled to file a claim for LLC member oppression and ultimately, for dissolution of the business.

What Is LLC Member Oppression?

“Oppression” generally refers to the actions taken by one or more members in an LLC to wrongfully deprive minority members of their rights. While there are many types of oppressive conduct that can be inflicted upon a minority LLC member, “squeeze-outs” are one of the most common forms of oppression. In such cases, the controlling LLC members transfer the LLC’s assets into a newly formed LLC, and ultimately force the minority member to give up their ownership. Similarly, a “freeze-out” happens when a controlling LLC member attempts to limit the income of a minority member or the control they have over it.

Other common forms of LLC member oppression may include:

• Reducing the minority LLC member’s income from the company
• Excluding the minority LLC member from business matters
• Failing to notify minority LLC members regarding a vote
• Keeping the minority LLC member out of management decisions
• Refusing to allow the minority LLC members to access business records
• Failing to make proper distributions

Oppressive behavior can also involve engaging in conduct that leads to waste of business assets, as well as failing to follow the LLC operating agreement. Importantly, the business judgment rule assumes controlling LLC members will make decisions in good faith that are in the best interests of the company — it shields them from liability, even if the outcome is poor. But the doctrine does not protect LLC members from liability for fraud, bad faith, willful misconduct, or a breach of fiduciary duty.

Remedies for LLC Member Oppression

If you are facing an LLC member oppression claim, Litico Law Group can advise you regarding your remedies and guide you through the process of filing suit. Schedule a consultation to learn how we can assist you.

LLCs are different from corporations when it comes to matters involving oppression. While the Illinois Business Act provides 12 statutory remedies for shareholder oppression — dissolution is the only remedy specified under the Illinois LLC Act in cases involving oppression or fraud by members with a controlling interest. Dissolution means ultimately ending the LLC’s legal existence. Once dissolution has been ordered, the LLC is required to stop conducting all business and begin winding up its affairs. Creditors must also be put on notice and all debts must be settled during this time.

In some cases, a judge has the discretion to award a remedy other than dissolution — including a buyout of the minority member’s distributional interest. A distributional interest refers to the member’s economic right to receive monetary distributions from the LLC’s assets, but no other interests of a member.

LLC member oppression claims should not be confused with derivative actions. Specifically, if the LLC itself has a cause of action, and the managers or members have failed to pursue a claim, members may file a derivative action to recover damages on behalf of the LLC. This mechanism allows members to take action to protect the interests of the LLC when it becomes necessary to enforce its rights. However, it’s essential to understand that this vehicle can only be used when the claim belongs to the LLC, rather than an individual member.

Preventing LLC Member Oppression With an Operating Agreement

One of the best ways to safeguard the interests of minority members and prevent LLC member oppression is with a well-drafted operating agreement. This document details how the LLC will operate, decisions will be made, profits will be distributed, and losses will be handled. Critically, an operating agreement can specify the rights of minority members — including their economic rights, voting rights, the right to inspect records, and the right to an appraisal. It can also specify the circumstances under which a member can be expelled from the LLC and establish a method for resolving disputes.

Every LLC is unique and has different requirements. It’s important not to use boilerplate operating agreements as these do not always adequately outline the rights and responsibilities of members. It’s best to have the assistance of a skillful business attorney who can help draft an operating agreement that fits the needs of the LLC.

Contact an Experienced Illinois Business Attorney

If you are facing an LLC member oppression claim, a knowledgeable Illinois business law attorney can advise you regarding your remedies and guide you through the process of filing suit. Located in Rolling Meadows, Litico Law Group serves the legal needs of small businesses, LLCs, and corporations throughout Illinois for a wide variety of matters. We welcome you to contact us or give us a call at (847) 307-5942 to schedule a consultation to learn how we can assist you.

If your business has prevailed in a lawsuit and you were awarded a judgment against a supplier, customer, or another company, the next step is to collect the amount you are owed. But you might be wondering how to collect on a judgment if it was issued in another state. In these cases, enforcing the judgment can be more complex — and require additional steps. Importantly, under the full faith and credit clause of the United States Constitution, foreign judgments rendered in other states must be treated the same as local judgments.

What Is a Judgment?

A judgment is a court order that entitles you to collect a specific amount of money from the judgment debtor. It puts a lien on certain property, such as real estate, in the jurisdiction where the judgment was rendered. But the judgment is simply the court’s decision in a lawsuit — it is not the vehicle that collects the money for you. Additional steps may need to be taken to enforce the judgment and obtain the money that is rightfully yours.

Domesticating an Out-of-State Judgment in Illinois

An out-of-state judgment allows you to pursue a variety of collection efforts — but only in the state where it was entered. In the event a judgment debtor has assets in Illinois and the judgment was not issued within the state, you must take measures to register and “domesticate the judgment.” This is a separate legal process from obtaining a judgment and is permitted under Illinois law pursuant to the Uniform Enforcement of Foreign Judgments Act (UEFJA).

To domesticate a judgment in Illinois, you must file an authenticated copy of the judgment, along with a detailed affidavit, a notice of filing, and a cover sheet with the clerk of the court. Once it has been properly registered, the foreign judgment will be recognized as an Illinois judgment. This means it can be enforced in the state and will have the same effect as any judgment that was originally rendered in Illinois. Generally, you can begin collection efforts immediately after the judgment has been domesticated.

For judgments that were entered outside of the United States, the Uniform Foreign Money Judgments Recognition Act (UFMJRA) applies. To register a judgment rendered in a foreign country in Illinois, the judgment must be final, enforceable, and conclusive. If it satisfies this criteria, it is entitled to the same full faith and credit as a judgment rendered in another state.

How to Collect on a Judgment After it Has Been Domesticated

It’s essential to have a skilled business attorney by your side who can help you navigate the judgment collection process. Litico Law Group’s business attorneys provide diligent representation and knowledgeable counsel for judgment enforcement in Illinois. Call (847) 307-5942 to schedule a consultation to learn how we can help.

Knowing how to collect on a judgment can be crucial to the success of your business and its bottom line. Critically, once an out-of-state judgment has been registered and domesticated, it becomes a lien on certain property owned by the debtor. There are a number of legal measures you can take to enforce a judgment and collect the amount you are owed.

Judgment collection efforts can include the following:

• Wage garnishment — Wage garnishment allows a creditor to satisfy their judgment by collecting it from the debtor’s wages. This is done by filing the necessary documentation with the court and serving proper notice on the debtor’s employer. Under Illinois law, a creditor can recover 15 percent of a debtor’s nonexempt wages until the employee either leaves their employment or the judgment is paid in full.
• Citation to discover assets — A citation to discover assets can be an essential judgment collection tool if you are collecting from a business entity or an individual. It allows you to demand that the debtor provide a variety of documentation regarding their assets, income, and debts. When a citation is served, it also creates a citation lien. This freezes the debtor’s assets and allows for other remedies, such as asset turnovers and charging orders. Failure to comply with the citation can result in contempt charges.
• Non-wage garnishment — In addition to wage garnishment, non-wage garnishment can allow you to seize non-exempt assets from the debtor, including the funds in their bank account. In order to seize a debtor’s bank account funds, you must first serve a garnishment summons to the financial institution, as well as notice upon the debtor. Once the summons has been received, the bank will freeze the debtor’s accounts, which prevents them from withdrawing any funds until a resolution has been reached in the case. Importantly, the court order authorizing the asset seizure will specify a certain dollar amount. A creditor cannot recover more than the amount specified in the order.

Pursuant to Illinois law, a judgment must be enforced within seven years of its entry. While a judgment is not extinguished after that time, it becomes dormant. A dormant judgment can be revived within 20 years of the original entry — once it has been revived, it must be enforced within seven years.

Contact an Experienced Illinois Business Attorney

Enforcing a foreign judgment after you’ve prevailed in a commercial lawsuit is often complicated. If you are wondering how to collect on a judgment that was issued in another jurisdiction, it’s essential to have a skilled business attorney by your side who can help you navigate the judgment collection process. Located in Rolling Meadows, Litico Law Group’s business attorneys provide diligent representation and knowledgeable counsel for judgment enforcement in Illinois, including those involving out-of-state judgments. We welcome you to contact us at (847) 307-5942 to schedule a consultation to learn how we can help.

Directors and officers of a corporation, as well as managers and members of an LLC, must always act in the best interests of the company. A derivative lawsuit is a mechanism that can be used to protect shareholders from abuse by a corporation’s officers and directors by ensuring accountability when those in control fail to pursue legal action. Similarly, these types of actions can also be used when an LLC has been wronged by a manager or member. If you’re a corporate shareholder or LLC member, it’s important to understand what a derivative action is — and when it is necessary to bring one.

What Is a Derivative Action?

A derivative action allows a shareholder to bring a lawsuit on behalf of the corporation or LLC when the company itself has been harmed. Not to be confused with direct claims, these types of lawsuits are typically brought by a minority shareholder or LLC member to address the misconduct of a director, officer, or LLC manager who is not acting in the best interests of the company. They can also be brought by a minority shareholder, or a group of minority shareholders, against a majority shareholder.

A derivative action can be used to address a wide range of wrongdoing, including the following:

• Breach of fiduciary duty
• Allegations of fraudulent activity
• Unjust enrichment
• Corporate waste and abuse of company assets
• Self-dealing and conflicts of interest
• Insider trading

Derivative actions can be crucial for safeguarding the interests of shareholders and LLC members. These lawsuits help to ensure that the company enforces its rights and can recover the damages to which it is legally entitled. In addition to an award of monetary damages and equitable relief, a prevailing plaintiff in a derivative suit may also be awarded their attorneys’ fees.

Requirements for a Derivative Action

Derivative actions are complex, and it is essential to have a skilled business law attorney by your side to help you navigate the legal process. We welcome you to schedule a consultation to learn how our business lawyer can help.

When a company has suffered damages, the board of directors (or managers in an LLC that is manager-managed) typically make the decision regarding whether to file a lawsuit. A derivative suit can be brought when those who control the company fail to act. However, certain criteria must be satisfied before a legal action can be commenced.

One of the requirements that must be met before a derivative action can be filed is that a demand must first be made on the corporation’s board of directors, or managers/members of the LLC. This requirement may be waived if it can be shown that the demand would be futile — making a demand is usually not necessary in matters where the directors would be defendants in the case. In some instances, a lawsuit can be avoided if the board is able to resolve the issue after the demand has been made.

In addition, the shareholder bringing the suit must have been a shareholder of the company at the time the harm occurred, although there are specific exceptions to this rule. For example, a shareholder may have standing to bring a derivative suit if they acquired their shares by operation of law from a person who was a shareholder at the time the misconduct took place. A shareholder may also proceed with a derivative suit at the court’s discretion, if they acquired their shares prior to disclosure of the wrongdoing that is the basis of the action.

How Is It Determined Whether a Claim Is Direct or Derivative?

Sometimes, it can be difficult to determine whether a claim should be brought as a direct or derivative action. However, the legal processes and requirements for each type of lawsuit are different. If a shareholder is seeking a legal remedy which would benefit themselves, such as in cases involving a freeze-out, the suit would be brought as a direct action. If the company would benefit from the outcome of the action, the lawsuit would be a derivative action. Simply put, an action would be considered a derivative suit if the funds to be recovered belong to the company.

Some types of claims can only be brought as a derivative action. Others can be brought as either a direct claim or derivative claim, such as those involving conspiracy or a breach of confidential relationship, depending upon whether the injuries were suffered by the shareholder in their individual capacity or the corporation. Importantly, a demand to the board of directors must only be made in a derivative action — this requirement does not apply if the lawsuit is a direct action.

Contact an Experienced Illinois Business Litigation Attorney

Derivative actions are complex, and it is essential to have a skilled business law attorney by your side to help you navigate the legal process. Located in Rolling Meadows, Litico Law Group’s business litigation attorneys provide reliable representation and capable counsel for a wide array of business disputes in Illinois, including those involving derivative actions. We welcome you to contact us at (847) 307-5942 to schedule a consultation to learn how we can help.

Shareholder oppression occurs when the majority shareholders or directors of a nonpublic corporation act in a manner that is oppressive, fraudulent, or illegal toward the minority shareholders. Such actions can be detrimental to individual minority shareholders and the company as a whole. In such cases, the aggrieved parties are afforded a number of remedies under the Illinois Business Corporation Act. In some instances, the minority shareholders may also be able to obtain an award of attorneys’ fees from the defendants personally, even in the absence of a contract or statute.

What Is Shareholder Oppression?

Shareholder oppression can take many forms in a corporation. Typically, it occurs when the majority shareholders act in a way that prejudices the minority shareholders. A common example of this is a “squeeze out.” This term refers to situations where the majority shareholders develop a plan to force the minority shareholders to sell their interest in the corporation at an unfair price. Shareholder oppression may also take the form of a “freeze out,” where the majority shareholders try to deny the minority shareholders their rights and benefits.

Additionally, shareholder oppression can arise when the majority shareholders deprive the minority shareholders of stock ownership, drain profits by inflating salaries for the majority shareholders, and fail to notify minority shareholders about meetings. It can also occur when a majority shareholder tries to physically lock a minority shareholder out of the premises, denies them the opportunity to inspect business records, or terminates their employment.

What Remedies Are Available in Shareholder Oppression Cases?

Typically, a lawsuit commenced by a shareholder who has suffered a direct injury as a result of shareholder oppression will be brought as a “direct action.” In contrast, if a controlling shareholder harms the company by breaching its fiduciary duties toward it, the shareholder must bring a claim derivatively on behalf of the company since it was the corporation that suffered the injury.

Shareholder oppression can be detrimental to individual minority shareholders and the company as a whole. It’s vital for the shareholders who suffered injury to take the appropriate legal measures. Schedule a consultation with Litico Law Group to learn how we can help.

There are a wide range of remedies available to minority shareholders under the Illinois Business Corporation Act for shareholder oppression. Under 805 ILCS 5/12.56, the remedies awarded by the court in matters involving shareholder oppression can include the following:

• The performance, prohibition, alteration, or setting aside of any action of the corporation or its shareholders, directors, officers, or any other party to the action
• The cancellation or alteration of any provision in the company’s articles of incorporation or bylaws
• Removal of any director or officer from office
• Appointing any individual to serve as a director or officer
• Requiring an accounting regarding any matter in dispute
• Payment of dividends
• Appointing a custodian who will manage the corporation

Depending on the circumstances of the case, a court may also order the corporation, or one or more shareholders, to purchase all the shares of the petitioning shareholder at fair value. If no other remedy would resolve the matter in dispute, a judge may order dissolution of the corporation.

Attorneys’ Fees in Shareholder Oppression Cases

While shareholders who bring a direct action are generally responsible for their own attorneys’ fees and expenses, Illinois courts have long recognized that a plaintiff who prevails in a derivative suit may also be awarded attorney’s fees. In such cases, the courts reason that a party who has conferred a benefit upon another due to litigation may obtain a share of attorneys’ fees from those who would receive the benefit — this is known as the “common fund” doctrine. The doctrine is an exception to the “American Rule” which requires that each party incur their own costs associated with litigation, including attorneys’ fees.

Importantly, a plaintiff may be able to recover attorneys’ fees from the defendants individually, rather than from the common fund. In fact, the Appellate Court of Illinois in the First Judicial District decided a case last year that addressed this specific issue. In Tsai v. Karlik, the court held that its broad powers granted under the common fund doctrine permitted the imposition of attorney fees against an unsuccessful defendant in a derivative suit. The court determined that it had the authority to order such an award, regardless of whether it is specified by contract between the parties or in a specific statute.

Contact an Experienced Business Litigation Attorney

Shareholder oppression can result in serious harm to a company — and its minority shareholders. It’s vital for the shareholders who suffered injury to take the appropriate legal measures. Located in Rolling Meadows, Litico Law Group’s business litigation attorneys provide high-quality legal services in Illinois for a broad scope of business disputes, including those involving shareholder oppression. We welcome you to contact us at (847) 307-5942 to schedule a consultation to learn how we can help.

Trusts can be an effective way to bequeath property and assets to loved ones while avoiding the stress and cost of the public probate process. However, there may be instances where a trust might be challenged in court. If you are considering contesting a trust in Illinois, it’s essential to understand that there are certain criteria that must be met. In addition, if the trust contains a no-contest clause, it’s critical to carefully consider whether it is in your best interests to challenge the instrument before doing so.

Here are five things you should know about challenging a trust in Illinois:

1. You Must Have Legal Standing To Challenge a Trust

To challenge a trust, you must have legal standing. This means you have a financial interest in the outcome of the court’s decision regarding the matter. Typically, an individual with standing will fall into one of two categories — they must either be a trust beneficiary or an heir of the decedent. Beneficiaries are those who are specifically named in the instrument. An heir is someone who would be legally entitled to inherit property from the decedent, absent a valid will or trust.

2. You Must Have Valid Grounds To Challenge a Trust

If you are the beneficiary of a trust or an heir with legal standing who is considering challenging a trust, it’s advisable to speak with an attorney. Litico Law’s Trust Litigation Attorney provides high-quality representation throughout Illinois for trust contests and trust litigation matters. Contact us today to discuss your situation.

Even if you have the legal standing necessary to contest a trust, you cannot simply challenge the instrument because you are unhappy with its terms. You must show that there is a specific legal ground upon which the trust may be deemed invalid. For instance, you must prove one of the following:

• Unsound mind — A trust settlor must have been of sound mind at the time the trust was executed and had the mental capacity to understand what they were signing.
• Undue influence — A trust must be executed at the settlor’s own free will. If someone unduly influenced them at the time that the trust was signed, it may be invalid.
• Fraud — If you can show that the settlor was deceived into executing the trust, the instrument may be rendered invalid.
• Failure to follow legal formalities — The proper legal requirements were not followed when executing the trust for it to be valid.
• Revocation — If the trust had been revoked by destruction or execution of a new instrument, grounds may exist to contest the trust.

To demonstrate one of the above legal grounds in order to invalidate a trust, you must be able to present adequate evidence. A judge will consider witness statements concerning the settlor’s mental state and any other relevant evidence that supports your position.

3. You Have a Limited Amount of Time to Challenge a Trust

When it comes to contesting a trust in Illinois, you only have a limited amount of time to do so. By law, you must commence a proceeding to contest the validity of the trust within two years of the settlor’s passing or six months from the date the trustee sends notice to the trust beneficiaries — whichever comes first. Failure to challenge a trust before the applicable statute of limitations expires can result in your being barred from bringing an action.

4. No-Contest Clauses Are Enforceable in Illinois

It’s important to be aware whether the trust you are seeking to challenge contains a no-contest clause. These types of clauses mean that if a beneficiary brings an action in court to challenge the trust, they would ultimately forfeit their inheritance — or a large portion of it — if the contest was unsuccessful. A settlor may use this type of clause to discourage beneficiaries from contesting a trust so that their wishes can be carried out in the way in which they had intended. But in the event fraud was discovered in connection with the execution of the trust, a no-contest clause may be deemed inapplicable and unenforceable.

5. A Trust Contest May Involve a Trial

One of the benefits of creating a trust is that they generally avoid court and public probate proceedings. However, when a trust is contested, it must go through the court process. Contesting a trust may involve lengthy and costly judicial proceedings — and a trial if the matter does not settle. The legal proceedings for challenging a trust are commenced by filing a petition with the probate court in the applicable county that states facts which would invalidate the trust if established.

Contact an Experienced Illinois Trust Litigation Attorney

If you are the beneficiary of a trust or an heir with legal standing who is considering raising a challenge to the trust instrument, it’s crucial to consult with a skillful attorney. A knowledgeable trust litigation attorney can best evaluate the facts of your situation and determine whether it is in your best interests to pursue litigation. Located in Rolling Meadows, Litico Law Group provides high-quality representation throughout Illinois for trust contests and trust litigation matters. We welcome you to contact us by filling out our online form or call (847) 307-5942 to schedule a consultation to learn how we can assist you.

During the course of doing business, disputes are not uncommon. Whether it’s a breach of contract, intellectual property matter, conflict between partners, or disagreement over finances, a commercial dispute can be time-consuming and costly. However, there are a few steps business owners can take if they believe litigation is anticipated.

Take Immediate Action

If you have received a cease and desist or demand letter, you should take immediate action. Although these types of letters are not legally binding, they usually indicate the party’s intention to bring a lawsuit. If you don’t respond, you could end up receiving a summons and complaint, along with a temporary restraining order. By acting swiftly, you can work to resolve the dispute before litigation is commenced.

Notify Your Insurance Carrier

If your business has insurance that protects you from certain types of commercial claims, it’s crucial to notify your insurance carrier promptly. Some insurers will only provide coverage if claims are reported immediately, so they should be contacted the moment litigation is anticipated.

Retain a Business Litigation Attorney

As a business owner, your focus should be on building your company and expanding your bottom line. By hiring a good business attorney from the outset, you can keep your eye on your business endeavors — rather than your legal issues. A commercial litigation attorney who concentrates in commercial law can help guide you through the business litigation process and work to protect your interests. They can also assess whether there are viable alternatives to litigation that can help save you time and money and determine the best course of action based on the facts of your case.

Preserve Evidence

The moment litigation is anticipated, you should take steps to preserve evidence. It is vital to identify the information and documentation that will support your position early on. In addition, be sure to comply with any retention policies your company has in place to avoid inadvertently destroying evidence that may be relevant such as contracts, emails, letters, invoices, and text messages. Importantly, do not intentionally discard any evidence — a court can impose severe sanctions for doing so.

Identify Custodians Who May Have Necessary Information

If you are facing a business dispute, you need a commercial litigation attorney by your side who can help you navigate the litigation process. Litico Law Group provides reliable representation to business owners and entrepreneurs throughout Illinois. We welcome you to contact us to learn how we can assist you with your commercial matter.

Part of preserving evidence is identifying data custodians and locating where the information is stored. Interview people in your company who are likely to possess information about the facts of the dispute. You should also instruct them not to destroy any documentation they may have. The information you gather can be essential to help develop a legal strategy in your case.

Remember That Evidence Can Be Stored Electronically

Evidence isn’t only that which is in tangible form. It’s vital to understand that you also have an obligation to preserve electronic data stored in computers, tablets, cellphones, and other devices. It’s a good idea to work closely with your IT team to make sure this data is properly saved and stored. This data will also have to be organized for review and production, which can take a considerable amount of time.

Limit Communication With the Other Party

If you have reason to believe business litigation is anticipated, it’s best to limit any verbal or written communication with the other side unless your attorney has approved it. Any letters, emails, or conversations you have may be used in court. Once you have retained counsel, all communication should go through them. Importantly, the other side’s attorney is not permitted to speak with you directly — they can only communicate through your attorney.

Choose a Strategy

Your attorney can help create a legal strategy based on the information gathered and the facts of your case. In some cases, mediation or arbitration may be used to resolve a dispute outside of the courtroom. Depending on the circumstances, settling out of court can be more cost-effective and help to protect your company’s reputation. However, if the other side refuses to discuss settlement, you may have no option other than proceed through the business litigation process.

Continue Business as Usual

Many commercial lawsuits take years to resolve. However, your business does not have to stop operating and growing during this time. It’s vital that you don’t allow a pending lawsuit dictate the success of your company or the relationship you have with your clients, customers, and employees.

Contact an Experienced Business Litigation Attorney

If you are facing a business dispute, it’s critical to have an attorney by your side who can help you navigate the business litigation process. Located in Rolling Meadows, Litico Law Group provides reliable representation to business owners and entrepreneurs throughout Illinois. We welcome you to contact us by filling out our online form or call (847) 307-5942 to schedule a consultation to learn how we can assist you with your commercial matter.

Business partnerships can come with many benefits and help owners accomplish much more than they would as a sole proprietor. But partners will rarely agree on everything all the time, and business disputes are not uncommon. Unfortunately, when difficult scenarios arise, the company’s future and its bottom line can be placed at risk. It’s important to understand that there are many measures partners can take in advance to plan for challenging situations — and help prevent conflict.

How Do Partnership/Business Disputes Occur?

Two or more partners in a business endeavor will rarely agree on everything. Accordingly, there can be many causes of partnership disputes. Some common reasons for conflict among partners can include breach of fiduciary duty matters, financial disputes, and lack of specific provisions in a partnership agreement. Conflicts can also arise when partners disagree regarding who is doing what work or if tasks are not distributed evenly.

In addition, business disputes among partners can happen if they have differing opinions concerning the expansion of the company or the services being offered. There can also be disputes if one or more partners wish to leave the partnership. Regardless of the reason, there are a few measures partners can implement to avoid the potential for conflicts and the possibility of legal action.

How Can Business Disputes Be Avoided?

Partners will rarely agree on everything all the time, and disputes are not uncommon. Before difficult scenarios arise, contact an Experienced Illinois Business Attorney at Litico Law to help you understand the many advance measures partners can take to help prevent conflicts.

Many business partnership disputes can be resolved before they occur by making sure all partners are on the same page. It’s essential that partners communicate effectively with each other and understand each other’s responsibilities and obligations. Here are a few steps business partners should take to avoid future disputes that can result in legal action:

Identify the Goals and Objectives of the Partners

Business disputes often arise because partners do not share the same values, or they have different long-term goals for the company. Partners should discuss their objectives for the company and consider their ideas on the type of growth strategy they will employ and the leadership style that will be implemented. By taking the time to understand each other’s perspectives from the outset, partners can be confident in knowing that their approaches to operating the business are consistent.

Have a Written Partnership Agreement in Place

Having a formal, written agreement in place is one of the most crucial steps partners can take to avoid disputes and the possibility of litigation. Although a written partnership agreement is not required by law, it can be critical to protect the company and safeguard the financial interests of the partners. A partnership agreement can do the following:

• Resolve legal issues in advance
• Address the capital contributions of each partner
• Decide compensation and distributions
• Specify decision-making procedures
• Outline the methods to be used for conflict resolution
• Determine what will happen if a partner fails to perform their duties
• Address the circumstances under which the business can be terminated

While a partnership agreement is meant to help partners avoid conflict, it’s important to make sure it is as detailed as possible. Any ambiguity in terms or vague provisions could lead to disputes — and ultimately, litigation.

Clearly Define Each Partner’s Role and Authority

Partners should be clear regarding each other’s roles and authority when it comes to how the business will be run. Even if the partners share equal percentages of ownership, it’s vital to determine in advance who will handle the company’s day-to-day operations — and which partner will be responsible for the accounting and recordkeeping. The details of the partners’ roles should be put in the written partnership agreement.

Address Dispute Resolution Matters

Even when all partners get along, partnership disputes are inevitable. Partners should take the time to discuss all issues that could arise early on. They should also agree on a method of dispute resolution before conflicts occur. While litigation should only be used as a last resort, alternative dispute resolution methods such as mediation or arbitration can help to resolve disputes cost-effectively and efficiently. The partners’ preferred method of resolving conflicts should be specified in the written agreement.

Work With a Business Disputes Attorney

A business dispute attorney can not only assist business partners with handling disputes when they arise — they can also help them avoid conflicts. An attorney can work closely with the partners to prepare the necessary paperwork and agreements to help ensure the company thrives. They can also help the partners devise a strategy tailored to meet the company’s vision and specific needs.

Contact an Experienced Illinois Business Attorney

If you are forming a business partnership, it’s important to have an experienced business law attorney on your side who can help you avoid future legal disputes and complications. Located in Rolling Meadows, Litico Law Group provides skillful representation to business partners and entrepreneurs throughout Illinois for a broad scope of business matters. We welcome you to contact us by filling out our online form or call (847) 307-5942 to schedule a consultation to learn how we can assist you.

A trust can be a powerful tool to safeguard a settlor’s assets and reduce tax consequences for their loved ones. While these instruments can ensure the settlor’s property is protected and their wishes are met, it’s important to understand that there are some instances where these documents might be challenged. Significantly, if a settlor lacked capacity or was unduly influenced at the time the trust instrument was signed, a beneficiary or legal heir may be able to contest it. In the event it can be proven that the creation of the trust was procured by undue influence or in connection with the settlor’s lack of capacity, the instrument will be deemed void.

When Can You Challenge a Trust?

If you are the beneficiary of a trust and discover your inheritance has suddenly decreased or a new beneficiary appeared in the instrument, you might consider contesting it. However, you cannot contest a trust simply because you are unhappy with what was written in the document. You must be able to establish that grounds exist to render all or part of the trust invalid. Grounds upon which a trust can be challenged can include lack of capacity, unsound mind, undue influence, fraud, or improper construction of the instrument.

In addition, not just anyone can challenge a trust — you must have the legal standing to do so. This means you have an interest in the outcome of the court’s determination. In other words, you must be able to show that you are a beneficiary with a financial interest in the trust. A legal heir who would have inherited a portion of the settlor’s estate under Illinois intestacy laws may also be able to assert legal standing.

What is Lack of Capacity When Challenging a Trust?

Grounds upon which a trust can be challenged can include lack of capacity, unsound mind, undue influence, fraud, or improper construction of the instrument. If you are challenging a trust, it’s crucial to speak with a skillful attorney who can guide you through the legal process.

Lack of capacity is one of the most common grounds upon which a trust can be challenged. These grounds for a trust contest can arise when the settlor did not have the legal capacity to execute the trust instrument. For instance, they may have had a certain medical condition, such as dementia, that made them incapable of understanding the consequences of signing the document. If the person executing the instrument could not understand the terms of the trust, the extent of their property, or their relationship to the beneficiaries, the grounds for challenging a trust for lack of capacity may exist.

To prove the settlor lacked the capacity to execute a valid trust, medical evidence must be presented to the court. This can show the settlor’s medical condition and state of mind at the time the document was signed. Additional evidence can also be helpful to establish that the document does not reflect the settlor’s true intent.

What Does Undue Influence Mean When Challenging a Trust?

Not to be confused with lack of capacity, undue influence refers to situations in which a party took advantage of a settlor’s vulnerability. To challenge a trust based on undue influence, it must be shown that the settlor’s age, health condition, dependency, cognitive abilities, or isolation made them vulnerable. Under Illinois law, there is a presumption of undue influence if the challenger of a trust can establish the following four elements:

• The existence of a fiduciary relationship between the settlor and a person who receives the benefit of the instrument;
• The settlor was in a dependent situation while the beneficiary had a dominant role;
• The settlor placed trust and confidence in said beneficiary; and
• The beneficiary participated in the procuring and execution of the instrument.

Undue influence can include actions or tactics such as controlling the settlor’s medication or interactions with loved ones. It can also involve the use of intimidation or coercion. Notably, under the Illinois Probate Act, any property transfer to a non-relative caregiver in an amount more than $20,000 is considered fraudulent if challenged. In such cases, the burden would be placed on the caregiver to prove that there was no undue influence exerted upon the settlor.

What Happens if a Trust Contest is Successful?

The legal process for challenging a trust is similar to contesting a will. A petition must be served upon the adverse party and any other parties interested in the outcome of the proceeding. Following the pleadings, the discovery phase of litigation begins — this is where evidence, information, and documentation is exchanged by both sides, giving the parties an opportunity to investigate the facts of the case. If the case does not settle, it will proceed to trial.

If a trust contest is successful, the instrument will be declared invalid. This makes it as if a trust were never created at all — and the outcome may be entirely different than it would have been if the trust remained in place. In such cases, the property and assets contained in the trust may be administered in accordance with Illinois intestate law. The individuals who would inherit under Illinois intestacy law depend upon which family members are living upon the decedent’s passing.

Contact an Experienced Illinois Trust Litigation Attorney

Challenging a trust can be complex, emotionally overwhelming, and stressful. If you are facing a trust dispute, it’s crucial to have a skillful attorney by your side who can guide you through the legal process. Located in Rolling Meadows, Litico Law Group provides reliable representation throughout Illinois for trust litigation matters. We welcome you to contact us by filling out our online form or call (847) 307-5942 to schedule a consultation to learn how we can assist you.

Contracts usually outline the terms of a deal and provide a legal remedy in the event there is a dispute. However, under Illinois law, a party may still be entitled to commence a legal action in the absence of a contract to recover their damages should there be a conflict. Quantum meruit and unjust enrichment can help to protect a plaintiff in cases where a defendant would receive an unfair benefit at their expense. The guiding principle of these legal remedies is fairness — and safeguarding a plaintiff’s interests so they will not be taken advantage of for the defendant’s own economic gain.

What Is Quantum Meruit?

Quantum meruit is a Latin phrase that can be translated to mean “as much as he deserved.” It is a legal remedy used in cases where someone has performed services but there is no contract in place — or the contractual agreement is defective in some way and unenforceable. While this would make suing for a breach of contract impossible, quantum meruit can help to ensure an aggrieved party gets at least some of their damages back in situations where they would normally receive nothing. Importantly, quantum meruit allows the party to recover the reasonable value of their work and material.

Quantum meruit is often used in cases where parties are eager to enter into a deal and forget to include key terms in a contract or fail to make a formal contract at all. A successful claim made under quantum meruit must demonstrate the following:

1. A service was provided for the benefit of the defendant;
2. The service performed for the defendant was not gratuitous;
3. The service was accepted by the defendant; and
4. There was no contract that detailed payment for the services.

The party asserting a claim under quantum meruit has the burden to establish their damages. The proof presented must be specific enough to demonstrate the value of the materials and services rendered.

What Is Unjust Enrichment?

If you’re experiencing a business dispute in the absence of a valid contract, or another party would be unjustly enriched by your services, it’s critical to protect your legal and financial interests. Contact an experienced business law attorney at Litico Law. We can advise you regarding your remedies and guide you through the litigation process.

Unjust enrichment is similar to quantum meruit but provides alternative relief. A claim made under unjust enrichment must show that the defendant was enriched while the plaintiff was impoverished as a result. A plaintiff must also show that the defendant’s retention of the benefit violated the fundamental principles of justice, equity, and good conscience. This claim can be asserted when there is no enforceable contract that governs the dispute. It can also be argued in cases where there was an enforceable contract, but a defendant’s tortious behavior gave rise to the claim.

In a claim for unjust enrichment, a plaintiff usually seeks to recover a benefit conferred directly to the defendant. But they may also seek to recover a benefit that was transferred by a third party to the defendant that belongs to them. In cases involving third parties, a plaintiff must allege that the third party should have given the benefit to the plaintiff but instead, they mistakenly gave it to the defendant — or the defendant obtained the benefit through wrongful conduct.

Notably, unjust enrichment claims are distinguished from breach of contract claims in that it does not require proving an actionable wrong. A plaintiff only must show that the defendant received a benefit that they were not entitled, and for which they should be compensated. While these claims may sometimes involve illegal conduct, wrongful behavior, or fault, such wrongdoing is not required to assert unjust enrichment.

What Is the Difference Between Unjust Enrichment and Quantum Meruit?

Both quantum meruit and unjust enrichment focus on the improper retention of a benefit. The same facts and circumstances might even be used to support both claims. However, there is one primary difference that should be noted — unjust enrichment and quantum meruit are differentiated by the way damages are measured.

Significantly, unjust enrichment focuses on the benefit received and retained as a result of the services provided by the plaintiff. Rather than damages derived solely from the plaintiff’s monetary expenditures. For instance, if the plaintiff provided labor and materials valued at $200, and the improvements made allowed a defendant to unjustly receive a benefit of $2,000, the plaintiff could receive a greater award for their damages than the $200 that had been expended.

Contact an Experienced Illinois Business Law Attorney

If you’re experiencing a business dispute in the absence of a valid contract, or another party would be unjustly enriched by your services, it’s critical to protect your legal and financial interests. An experienced business law attorney can advise you regarding your remedies and guide you through the litigation process. Located in Rolling Meadows, Litico Law Group provides knowledgeable representation to business owners and entrepreneurs throughout Illinois. We welcome you to contact us by filling out our online form or call (847) 307-5942 to schedule a consultation to learn how we can assist you.

When people think of business theft — also referred to as embezzlement — criminal activity is usually what comes to mind. While embezzlement is typically a white-collar crime that can come with serious legal ramifications, including jail time and substantial fines, a business partner who embezzled or stole money can also be held civilly liable for their wrongful act. If you or your business suffered financial harm due to the embezzlement of a business partner, you may be entitled to commence a civil lawsuit, in addition to filing any applicable criminal charges.

Suing for a Partner’s Theft or Embezzlement in Business

Unfortunately, occurrences of theft and embezzlement in business are not uncommon. If you have discovered that your business partner was embezzling or stealing money, physical property, intellectual property, or other assets, you may be wondering whether you have any legal recourse. Even if you file criminal charges for embezzlement in business, you may still be able to hold the individual liable in a civil lawsuit — and recover your damages.

Depending on the facts and circumstances of the case, there are several grounds upon which you may be able to base a civil lawsuit. For instance, if your business partner committed the theft through fraudulent conduct, you may be able to pursue a civil claim for fraud. You might also be entitled to commence a claim for a breach of fiduciary duty, breach of contract, misrepresentation, or other grounds. In doing so, you may be able to recover your monetary damages — including compensatory, incidental, consequential, and liquidated damages.

You might also be entitled to punitive damages in limited cases where the defendant’s conduct was particularly egregious.

Commencing a Civil Action for Fraud

There are various types of fraud that can occur in business. For instance, a business partner may wrongfully take and use business funds to satisfy a personal debt or purchase goods for personal purposes. They might also use business funds for unauthorized business activity. To prove that your business partner committed fraud, you must satisfy each of the following elements:

• Your business partner made false statements of material fact;
• Your business partner knew the statements were false, believed them to be false, or made the statements in reckless disregard of the truth;
• Your business partner made the statements to induce you to act;
• You reasonably and justifiably relied on the false statement; and
• You suffered damages because of the false statement.

If you suspect that your business partner has committed fraud, it’s important to take immediate action to prevent further harm to the company. However, it’s crucial to have sufficient evidence that fraud occurred — this can come in the form of receipts, fraudulent invoices or financial transactions, bookkeeping records, and other documentation.

Suing a Business Partner for Breach of Fiduciary Duty

Unfortunately, embezzlement in business is not uncommon. A well-drafted partnership agreement can help to resolve conflicts in advance, specify authorized behavior, limit partners from taking funds out of accounts for personal use, and prevent partners from making significant purchases.

If your business partner committed fraud or embezzled money from the company, they have also breached their fiduciary duty. Under Illinois law, a business partner has three primary duties. These include 1) accounting for profits, property, opportunities, or other benefits derived by them; 2) refraining from dealing with the partnership as a party with an adverse interest or on behalf of a party with an adverse interest to the partnership; and 3) refraining from competing with the partnership.

Notably, a business partner’s fiduciary duty also encompasses the duty of honesty, loyalty, fair dealing, and good faith. A breach of fiduciary duty in a business relationship is a serious matter for which the aggrieved party may be able to commence a lawsuit to recover their damages.

Preventing Embezzlement in Business With a Partnership Agreement

Although a partnership agreement is not required by law, it is crucial to have one in place to safeguard the company. A well-drafted partnership agreement can help to resolve conflicts in advance, specify authorized behavior, limit partners from taking funds out of accounts for personal use, and prevent partners from making significant purchases. A partnership agreement should also include a provision for dissolution procedures and the circumstances under which the partnership can be dissolved.

In the event a partnership does not have an agreement in place, it can sometimes be more difficult to demonstrate that a partner’s alleged misconduct constitutes fraud. If there is no written partnership agreement that specifies what qualifies as unauthorized conduct, it will be necessary to rely on other documentary evidence to prove embezzlement in business. A skilled business litigation attorney can investigate your case and assist you with uncovering the evidence necessary to establish your claim.

Contact an Experienced Illinois Business Litigation Attorney

If you have reason to believe your business partner embezzled assets or stole from the company, it’s critical to have an experienced business law attorney on your side who can advise you regarding your legal recourse. Located in Rolling Meadows, Litico Law Group provides reliable representation to business owners and entrepreneurs throughout Illinois for a wide variety of business matters. We welcome you to contact us by filling out our online form or call (847) 307-5942 to schedule a consultation to learn how we can assist you.