A partnership agreement is the foundation upon which the legal relationship between business partners rests. This agreement is the basis for the rights and responsibilities of each partner. When one partner breaches this agreement, it can cause harm to the non-breaching parties. In this article, we examine the steps to take if your business partner breached your partnership agreement.
What Is a Partnership?
A partnership, which is sometimes called a general partnership, is created whenever two or more individuals agree to conduct business with one another for profit. This applies even if there is no formal agreement or intent to form a partnership.
Parts of a Partnership Agreement
Although a partnership agreement isn’t required, it’s highly advisable. Without an agreement, the partners’ respective duties and obligations are unclear, and this can be an issue should a legal dispute ever arise. In addition, although a partnership agreement doesn’t have to be in writing, having a written agreement is extremely useful. At a minimum, a partnership agreement should address the following topics:
- The financial contributions of each partner
- The way the partners will split the profits
- How the partners will make decisions
- What will happen should the business need to close
- What will happen if a partner leaves, dies, or becomes incapacitated
- How the partners will handle disputes
- Liquidated damages
- Dissolution of the business
How to Address a Partnership Agreement Breach
As noted above, it is advisable to address dispute resolution methods in a written partnership agreement. In fact, many partnership agreements address the steps to take if one partner breaches the agreement. For example, some partnership agreements include terms that prohibit a partner from bringing a lawsuit against the other partners for losses. Others may stipulate that partners can seek liquidated damages of a specific amount against breaching parties. Some partnership agreements, however, fail to outline procedures for addressing breaches. If you are a partner, and your partnership agreement does not address the steps for handling a breach, then you may have several options available to you, including:
- Filing a breach of contract action against the partner in civil court
- Expelling the breaching partner from the partnership
- Seeking liquidated damages from the breaching partner
- Negotiating a settlement with the breaching partner
However, before pursuing any of the above options, you should contact an experienced Florida civil litigation attorney for assistance.
Contact a Florida Civil Litigation Attorney
At Gueronniere, P.A. we provide civil litigation services to clients throughout the state of Florida. Founding civil litigation attorney Grace de la Gueronniere understands what it takes to succeed in a partnership agreement dispute, and she is here to put her knowledge and experience to work for you. If you require legal assistance in Florida, please contact us as soon as possible to arrange a free initial consultation with our talented Florida civil litigation attorney.