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When your business partner breaches a contract

When you enter into a business partnership with someone, you probably do so with the belief that the two of you work well together, and that you will continue to do so until the end of your business relationship. Regrettably, however, business partnerships sometimes fail, whether because you have different visions, you experience a breakdown of trust between you or what have you.

When your partner breaks the terms of a partnership agreement the two of you have in place, however, you typically have several options as far as seeking recourse. 

Holding the partner liable for breach of contract

If your business partner does something that directly contradicts the terms of an existing contract between you, you may be able to hold him or her liable for doing so. You may have any number of different types of contracts in place, but if your partner breaks the terms of your partnership agreement, confidentiality agreement or noncompete agreement, to name a few types, you may have legal recourse.

Expelling this person from your partnership

Whether you can ultimately expel someone from your partnership depends on several factors. Typically, if you want to expel a partner, you must first dissolve your partnership agreement. However, increasingly, companies that have partnerships involving more than two people are including language in partnership agreements that allows for the company to live on, even in the event that one partner undergoes expulsion.

Settling with your partner

If you wish to find a way to hold your partner accountable for a contract breach, but you do not wish to end the partnership forever, you may want to consider trying to agree upon a settlement. Even if you do not receive as much as you might like through this method, you may save money in the long run by not engaging in a lengthy courtroom battle.

While these are some of the options you may have at your disposal if your business partner breaches a contract, please note that this is not an exhaustive list of all possible solutions.

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