Business partners generally start out with the best of intentions. They’re excited about working together and creating a great and profitable business. However, even pathways in the business world can be paved with good intentions that somehow went awry. And sometimes breach of contract lawsuits between business owners become an unfortunate reality.
We strongly encourage business owners and partners to have a business lawyer draft and review their partnership agreements and contracts. Such contracts must be valid before the breach occurs.
Contracts Among Business Partners
The primary contract usually would be the partnership agreement. It’s always best to have a written partnership agreement rather than a series of verbal agreements.
Your partnership agreement also must be considered a valid contract, which means including elements like:
- Mutual assent. This is expressed through one party making a valid offer and the other accepting it.
- Adequate consideration. ‘Consideration’ is the benefit each party gives or receives for fulfilling contractual obligations. Money is often the consideration chosen, but contracts can also include real property, promises, acts, or agreements not to act.
- Competence. Were the parties old enough to agree to the contract, and did they have the mental capacity to understand the terms?
- Legal Purpose. Valid contracts must have a legal purpose. Contracts with an illegal purpose (like agreeing to rob a bank) are unenforceable.
Partnership agreements are contracts that pertain specifically to arrangements made among business partners. Breach of contract lawsuits can be the result of disputes and squabbles that remain unresolved.
Where Business Owners Can Go Wrong
Wherever two or more people are together, disagreements can arise. In a business partnership situation, partners may fail to perform the obligations required of them in several ways, including:
- Misappropriation of partnership assets,
- Abandonment of the partnership, and
- Failing to contribution capital when required by the partnership agreement.
When a partner breaches a contract, including the partnership agreement, what options do the remaining partners have?
Resolving Breach of Contract Lawsuits Between Business Owners
The first place to start is the partnership agreement or contract itself. The parties and their attorneys should review the contract provisions to see if a breach has occurred and how it should be handled.
Sometimes a breach can be cured without resorting to litigation. The partners might just need to discuss the problem with a neutral party, like a mediator. Also, their respective attorneys could review the situation and try to resolve it as amicably as possible. Here, again, the contract may include provisions for dispute resolution.
However, breach of contract lawsuits are sometimes necessary. The wronged partners could seek compensation for financial damages to the business. They might also request that the partner take action or cease taking action if the company is being harmed. No matter the cause, it’s crucial to have a business lawyer on board before attempting to resolve a breach of contract.
We Handle Breach of Contract Lawsuits When Necessary
For some situations, we might be able to help you negotiate a settlement before filing a breach of contract lawsuit. If a complaint has been filed, alternative dispute resolution like mediation or arbitration might be in your best interests.
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with business and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.