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Handling a business partner’s agreement breach

On Behalf of | Jan 18, 2023 | Business Litigation

When you and someone else agree to run an Oregon business together as partners, you may decide to draft a formal partnership agreement stating as much. On the other hand, you may decide to partner with one another using nothing more than a verbal agreement. While both types of agreements may wind up proving enforceable, it is advisable that you get your agreement down in writing so that you have something to reference in the event that a disagreement or breach arises.

Per Chron., a time may come when your business partner breaches the terms of your partnership agreement. When this happens, you may have several options available to you in terms of finding a resolution. Some of these options are as follows.

Seek damages

If you have a written partnership agreement, it might already address what happens if one partner’s breach leads to a loss for another partner through a liquidated damages clause. For a court to enforce this type of clause, it typically has to be “reasonable” in nature.

Negotiate a settlement

Another possible way to handle a business partner breaching your agreement involves negotiating a settlement with that party. This may prove worthwhile if you have a reason or a desire to continue working with your partner in the future.

Expel the partner

Unless you have a drafted partnership agreement that covers the conditions under which you may expel a partner, you typically may not expel a partner for a breach unless you decide to dissolve the partnership in its entirety.

These are some of your options for handling a partner’s agreement breach. The option that may serve your needs most favorably might depend on whether you want to preserve the working relationship, among other considerations.