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Breach of Contract by a Business Partner

When things go wrong in a business relationship, and your business partner does something that could hurt your business venture, you might wonder what you can do about the situation. Also, you might have questions about what grounds there are for filing a lawsuit against one or more of your business partners.

A Miami, Florida business litigation attorney can answer your questions about breach of contract by a business partner and advocate vigorously on your behalf. We can discuss your options and help you develop a strategy for addressing the situation.

Grounds for Suing a Business Partner for Breach of Contract

Different business arrangements have different rules, but most business partnerships are in the form of a general partnership. Here are some of the grounds for pursuing a business partner:

  • Breach of fiduciary duty. In this situation, one of your partners might put his own interests over the interest of the partnership. For example, he might divert potential business to himself individually instead of to the partnership.
  • Breach partnership agreement. Your partnership agreement will stipulate the obligations of each of the partners. If one of your business partners breached terms of the partnership agreement and that act caused you or your business harm, you might be able to file a lawsuit to enforce the terms of the partnership agreement. 
  • Abandonment. If one of your business partners leaves the partnership without following proper procedures for winding up the business, and you might be able to file a lawsuit for your losses. Your remedies will depend on the language of your partnership agreement.

These are some of the more common circumstances that involve a breach of contract by a business partner. There are many other possible scenarios.

What You Can Do if Your Business Partner Breaches a Contract

Your remedies in the event of a breach of contract by one of your business partners will depend on the facts of the situation, the terms of your partnership agreement, and your willingness to preserve a business relationship with that individual. 

  • If you want to preserve the working relationship with your business partner, you could try to negotiate a resolution of the dispute. Reaching a settlement could save you and the business legal costs and allow you to choose the certainty of the outcome over the risk of litigation. A business attorney could negotiate and draft the settlement documents for you.
  • You might be able to expel the partner from the company if your partnership agreement allows that remedy. Otherwise, you would have to dissolve the partnership. Even if your partnership allows for expulsion of a partner and continuation of the partnership without the expelled partner, you should tread carefully to prevent a bad faith expulsion lawsuit.
  • Whether you expel the breaching partner from the business or not, you could file a breach of contract lawsuit against a business partner whose actions violate the partnership agreement or some other relevant contract. Depending on the situation, you might wish to sue for compensatory damages from the breaching partner.
  • When a partnership agreement allows for the possibility of liquidated damages, that remedy could be a viable option. You will need to exercise caution with this remedy. A court will only enforce the liquidated damages clause if the judge feels that the amount of the damages is reasonable.

A Miami, Florida business attorney can provide guidance as your business navigates these tricky waters. Contact our office today for a free consultation.