Partner of a firm started another firm with similar name. What to do?


Ours is a partnership firm started 3 years back consisting of three partners. Few days back i got to know that one of the partners has started another firm with similar name in the same sector. Now he wants us to hire a resource to perform duties assigned to him so that he can concentrate on his new venture. The problem is that similar resource would require us to pay higher cost than what we have been drawing from the firm at present time. Moreover how can we share details of our business with someone who has now become a direct competitor. Please suggest what r the options available with me.

Answers (2)


421 votes

When you started a Partnership firm, at that time, you must have executed Partnership deed, in the said partnership deed. In the said patnership deed there must be an exit clause where any of the partners can exit from the firm. In case there a clause, please follow the clause and accordingly send him notice regarding the same.

Further, your other partner cannot start a new firm with same name in the same sector. You can take a legal action against him and send him a legal notice through a lawyer, wherein you should clearly mention, the said facts.  

Also, if you intend to share confidentiality with any of the resource then get an NDA executed from the resource which should clearly state that they cannot disclose the information.

98 votes

Was there a lock-in for each partner? It is settled law that a partner of a firm cannot engage in two competing ventures. You can get an injunction order against him restraining him from being participating in two ventures. Meet a lawyer with a copy of your partnership deed.


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