Breach of contract options. Let’s say you and some acquaintances are shooting the breeze about your ideas for a new business venture. One thing leads to another, and before you know it, you all agree that doing business together and sharing in the profits and losses is a great idea. This seems like a great opportunity for each of you to contribute your talents to a new enterprise. You come up with the basic tenets of the arrangement, and before you know it, you are all in business together. Everything is coming up roses, until you suspect that one person is in breach of contract. What are your options now? In a situation this complex, an experienced employment attorney could help.
Mediation/Arbitration
Oftentimes a good mediator or arbitrator can walk you and your partner(s) through any disputes you may have. Hopefully you have a written agreement, which will make it easier to hold everyone’s feet to the fire. Even if you do not, be aware that litigation will tend to enflame an adversarial relationship, which will make working together difficult if all partners wind up staying connected to the business.
Expulsion
When you wrote up your initial agreement, if you included an expulsion clause, you may now be able to expel the offending partner for breach. Otherwise, expulsion is not possible, unless you dissolve the partnership altogether.
In the event you do have that expulsion clause, and you choose to exercise it, be sure your actions are in response to a serious breach of your contract; otherwise you may be the target of a lawsuit yourself.
In either case, a knowledgeable employment attorney can advise you of the pitfalls and legal requirements you will encounter.
Suing for Breach of Contract
If you can not or are not willing to expel the offending partner, you may still have a legal option to sue if financial harm has come about due to your partner’s actions. There are several situations that might justify this course of action:
- A partner walked away from the business with not justifiable reason, breaking an agreement for participation for a specific time-period;
- A partner misappropriated assets;
- A partner caused the business to lose inventory or clients.
Breach of Contract Statute of Limitations
You also need to be aware of time restraints when it comes to suing a business partner. If you have only a verbal agreement, the statute of limitations for filing suit is two years from the date of the alleged breach. When a written contract exists, the statute is four years from the breach.
When You Do Not Know How to Proceed
Running a business is no picnic, and the endeavor gets much more challenging when you suspect a partner of breach of contract. The law allows for several remedies in such a circumstance. Our ethical and skilled team at Beck Law P.C., can help you examine your options and pursue the action that is best for your circumstance. Contact us today in Santa Rosa for a confidential consultation.
SANTA ROSA – PETALUMA – UKIAH – LAKE COUNTY