When your business partner breaches a contract
When you enter into a business partnership with another person in California, you need to have a certain degree of trust in this individual, as any profits or losses your business experiences will directly affect you both. Even if you have the utmost trust in the person with whom you form your partnership, having a carefully crafted partnership agreement in place may help prevent major problems down the line. At the Daily Law Group, we recognize that problems can arise when one party in a business partnership breaches a contract, and we also understand that having a partnership agreement in place may give you additional legal recourse in the event that this happens to you.
According to the Houston Chronicle, you will typically have several options after a business partner breaks a contract. Depending on your specific circumstances and the circumstances surrounding the contract breach, you may have reason to wish to preserve the relationship between you. If so, you may want to try to negotiate a settlement that holds your partner accountable for the breach, but without irrevocably damaging the relationship between you.
In other situations, you may not wish to work with this person anymore, period, and this is where having a written partnership agreement can come into play. Unless you have an agreement in place that explicitly states that you can expel your partner after he or she breaches a contract, you typically cannot do so unless you completely dissolve the partnership. Your partnership agreement may, however, specifically dictate that the other partners can move forward with the business after expelling the partner involved in the breach.
If neither of these solutions fits your needs, you have other options available to you. You may, for example, pursue a lawsuit against the person who breached the contract, regardless of whether you plan to expel this individual from the partnership. You can learn more about business law on our webpage.
Handling a dispute with business partners
Our law firm recognizes that business owners in various fields face many challenges. Sometimes, these hardships may involve staff members, such as sexual harassment allegations as we have discussed on our blog. In other cases, customers may be involved or a business owner may have questions about taking their company global. However, problems can also arise with respect to business partners, and this can be especially tough for those who own major corporations, small family-run businesses, or any type of company. Unfortunately, disputes that arise involving business partners can have a wide range of ramifications if they are not dealt with appropriately.
In some instances, a business owner may be able to resolve a dispute with their business partner(s) without even going to court. Simply discussing the issue(s) at hand and clearing up confusion is enough to resolve the situation and minimize stress for all parties. Unfortunately, this is not always an option and legal action is inevitable in some cases. For business owners, litigation can bring a number of consequences, from those which are temporary (anxiety, lost time) to those which may have long-term ramifications (losing crucial partnerships, damage to your reputation, financial penalties, etc.). As a result, it is pivotal to work through a dispute with your business partners carefully.
Various questions may need to be answered and you could be unsure of which direction is best. Browse to the business law page over on our blog and you will be able to access more data related to business partner disputes.