When you go into business with someone, you expect your partner to follow through on their promises. Whether it’s splitting profits, managing day-to-day operations, or upholding financial responsibilities, a breach of your agreement can jeopardize the entire business. If you find yourself in this situation, here’s what you need to know and what steps to take.
Review Your Partnership Agreement
Start by carefully reviewing your written partnership agreement, if you have one. This document likely outlines each partner’s responsibilities, how profits and losses are handled, and what happens in the event of a dispute or breach. It may also include a dispute resolution clause that dictates whether mediation, arbitration, or court is required.
If your agreement is verbal or informal, you may still have legal protections, especially if there is evidence of the agreement through emails, texts, or financial records.
Document Everything
As soon as you suspect a breach, begin documenting the issue. Save communications, financial records, and anything else that shows your partner’s failure to meet their obligations. The more evidence you have, the stronger your case will be if legal action becomes necessary.
Talk to Your Partner (If Appropriate)
Sometimes, misunderstandings or external issues can lead to a breach. If it’s safe and professional to do so, try having a conversation with your partner to clarify the situation and see if the issue can be resolved informally. However, if the breach is serious (e.g., fraud, theft, or ongoing negligence), it’s best to consult with an attorney before engaging.
Consider Mediation or Alternative Dispute Resolution (ADR)
Depending on your agreement and the nature of the breach, mediation may be a faster and less expensive way to resolve the dispute. A neutral third party can help both sides reach a fair resolution without going to court.
Know Your Legal Remedies
If your partner’s breach has caused harm to you or the business, you may be entitled to:
- Monetary damages for financial losses.
- Injunctive relief to stop your partner from certain actions.
- Dissolution of the partnership or removal of the partner.
- Specific performance, which forces the partner to fulfill their obligations.
Conclusion
If your business partner has breached your agreement, time is of the essence. Delaying action can lead to greater financial loss, legal complications, and long-term damage to your business. At Romano Law, we understand what’s at stake and we’re ready to fight for your rights. Whether you need to enforce the terms of your contract, recover damages, or dissolve the partnership entirely, we’ll guide you through every step with clarity and confidence.
Contributions to this blog by Kennedy McKinney.
