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.