Going into a business partnership with another person can be very exciting as each party will be bringing some value to the table. However, a business partnership can also be stressful, especially when differences arise. This is why business partners sign a contract before getting into a partnership.
A breach of agreement happens when one or more parties fail to honor the terms of the partnership agreement. If this happens, the other partners in the contract deserve to know their legal options.
Dealing with a breach of your partnership agreement
Most partnership contracts often come with a clause outlining the terms of your deal and what is to happen in the event that one party violates the agreement. In a situation where the partnership agreement provides for arbitration or mediation, the parties involved may explore the possibility of engaging professional help before exploring other options.
However, if the partnership agreement is not clear on what should happen in the event of a breach, then the aggrieved party may take any of the following actions:
- Negotiating a settlement: Sometimes, you may still be interested in maintaining the partnership even after the breach. If this is the case, then you may want to agree on a settlement before continuing with the partnership.
- Expel the partner – A breach of a partnership agreement can be serious enough to warrant severing ties with the other partner. However, it is vital to establish if the partnership agreement provides for expulsion or dissolution of the entire partnership.
- File a lawsuit– Sometimes, a breach in an agreement can result in economic and non-economic loss to the business. If this happens, you may sue your business partner for the resulting damages.
A business partnership comes with its share of pros and cons. Find out how you can safeguard your rights and interests while in a business partnership when there are conflicts or a breach.