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When your business partner breaches a contract

As a California business owner who is also part of a partnership, you may understand all too well that maintaining a successful business partnership is not always easy. When there are “too many cooks in the kitchen,” so to speak, it can be difficult to make decisions that please everyone with a say in the matter, and in some cases, business partners find that they have little choice other than to part ways. This scenario becomes increasingly likely when one partner in the agreement breaches a contract in the eyes of another. At Kashfian & Kashfian, LLP, we have a firm grasp of these and other issues commonly faced by business partners, and we have helped many clients looking to hold their partners accountable for contract breaches make efforts to do so.

Per SmallBusiness.Chron.com, you may have several distinct options at your disposal if your business partner breaches a contract. In one scenario, you may be able to attempt to hold your partner liable for the contract breach by suing them. Whether you can ultimately try to do this depends on exactly what type of contract breach occurred. If the breach involved, say, misappropriation of partnership assets, you may be able to move forward with a lawsuit. If, however, your partner decided simply to leave your partnership, and your contract does not dictate exactly how long your partnership was to last, this may not constitute a breach of contract.

Another option you may have after a contract breach is to dissolve the partnership entirely. Unless your partnership agreement includes specifics about how to expel a partner, should the need arise, you typically cannot do so without completely dissolving the partnership. If your agreement does allow you to expel a business partner, make sure you have a valid reason for doing so to avoid a potential lawsuit from the expelled party.

You may, too, be able to negotiate a settlement with your partner who breached a contract, and you may have additional options at your disposal if your original partnership agreement contained a liquidated damages clause. You can find more about business law on our webpage.

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Kashfian & Kashfian, LLP
1875 Century Park E, Suite 1340
Los Angeles, CA 90067

Phone: 310-464-1145
Fax: 310-751-7579
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