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Has your business partner breached your partnership agreement?

On Behalf of | Dec 7, 2020 | Contract Disputes

Running a business with help can often make certain matters easier. As a result, you may have felt confident that moving forward with your business idea with a partner was the best way to go about starting your company. At first, your operations may have run smoothly, but you recently ran into a significant issue with your business partner.

It is not unusual for business partners to have disagreements from time to time, but your situation may be more difficult because your partner breached the terms of your partnership agreement. This could happen in many ways, depending on the terms of your agreement. Nonetheless, if your partner did not adhere to the terms of the contract, you may need to take serious action, especially if the breach resulted in damages to the company.

What are your options?

Addressing issues with a business partner is not always easy, and when something as significant as a breach of contract has occurred, it is important to approach the ordeal in a fitting manner. Before taking any action, you may want to go over your partnership agreement to refresh your memory on the terms. Your contract may address the steps you both agreed to take in the event of a breach.

In general, some common routes business owners explore after such a breach include the following:

  • Suing the partner: In some cases, a breach of contract can lead to damages to the company, and if this is what happened with your situation, you may have reason to sue your business partner for compensation.
  • Coming to a settlement: It may be possible for you to want to continue with your partnership despite the breach, but you may also want some type of restitution for the breach. A settlement between you and your partner may allow you to come to an agreeable compromise.
  • Expelling the partner: The breach could also be serious enough for you to want to expel your partner from the company and sever ties completely. However, it is important to know whether your partnership agreement allows for the expulsion of one partner or whether you would have to dissolve the partnership entirely.

When a business partner breaches a contract, it can feel like a betrayal. The manner in which one addresses it can depend on the severity of the breach, the relationship between the partners, the available resolution options, terms of the partnership agreement and more. As a result, as you look for the best way to handle your predicament, you may want to discuss your options with a California business law attorney.