Your Partner Starts a Competing Business

Date: December 10, 2025

Trust is the foundation of any successful business partnership. When a partner starts a competing business, that trust is broken, and the partnership may face serious harm. If you find yourself in this situation, you may feel uncertain about what steps to take and how to protect your business.

This article will explain what it means when a partner competes with the partnership, the legal rules that apply in Ontario, and what remedies may be available to you.

Can a Partner Compete with the Partnership?

In most cases, the answer is no. Business partners owe each other fiduciary duties. This means they must act in good faith and in the best interests of the partnership. Starting a competing business often breaches this duty, especially if a partner uses the partnership’s resources, confidential information, or intellectual property for their own benefit.

If your partnership has a written agreement, it may also contain a non-compete clause. These clauses restrict partners from starting or participating in competing businesses within a certain location and timeframe. If the clause is reasonable, it may be enforceable in Ontario courts.

Even without a written partnership contract, Ontario law provides protection. Under section 30 of the Partnerships Act, a partner cannot carry on a competing business without the consent of the other partners. If they do, they must account for and pay over any profits they earned from the competing venture.

Remedies Against a Competing Partner

If your partner has breached a non-compete clause, violated fiduciary duties, or contravened the Partnerships Act, you may have several legal remedies available, including:

Recovering profits your partner made from the competing business
Seeking compensation for economic and non-economic losses
Applying for an injunction to stop the competing activities
Expelling the partner from the partnership
Dissolving the partnership if necessary

Dealing With Partnership Disputes

The first step in any dispute is to review your partnership agreement. Many contracts include dispute resolution clauses requiring mediation or arbitration before going to court.

If your agreement does not contain such a clause, or if alternative dispute resolution fails, you may need to pursue commercial litigation. A lawyer can help you draft a demand letter, negotiate with your partner, or seek a temporary injunction to prevent further competition while the case proceeds.

How a Commercial Litigation Lawyer Can Help

A commercial litigation lawyer can provide critical support when dealing with a competing partner. They can:

Review your partnership contract and fiduciary obligations
Advise on the strength of your claim and potential remedies
Represent you in negotiations or mediation
Prepare and file court documents on your behalf
Seek injunctions or other urgent remedies
Protect your business interests throughout the process

Having an experienced lawyer on your side can make the difference between a fair resolution and significant financial loss.

In Summary

When a business partner starts a competing business, the impact can be devastating. Whether they are misusing confidential information, breaching fiduciary duties, or violating a non-compete clause, it is important to act quickly to protect your rights and the partnership.

A commercial litigation lawyer can guide you through your options, enforce your rights, and help you achieve the best possible outcome.

Need Legal Advice About a Partnership Dispute?

Contact Achkar Law today.

Our team of experienced business partnership lawyers understands the complexities of partnership disputes and can help you manage the process with confidence.

The article in this client update provides general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Achkar Law Professional Corporation and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Achkar Law Professional Corporation. ©

Practice Areas: Commercial Litigation, Breach of Fiduciary Duty, Breach of Confidentiality, Business Partnership Disputes, Breach of Contract , Injunction and Injunctive Relief