What Constitutes a Breach of a Business Partnership Contract

Post by: Eric Jones | Posted Date: November 29th, 2017 |

When it comes to a business partnership agreement, a breach occurs when one or more partner

  • Fails to fulfill his or her duties
  • Fails to share complete and factual information with other partners
  • Fails to keep a promise
  • Fails to act in the best interests of the business
  • Fails to obey relevant laws and regulations

Whether a breach occurs, and what can be done about it, depends almost entirely on what the business partnership contract stipulates. This makes putting the agreements between partners into writing essential. Oral contracts, as the saying goes, are not worth the paper they’re written on. Extending that lesson, imprecise language or underdeveloped clauses in partnership contracts can leave partners few legal ways to enforce obligations.

Business Partnership Contract Clauses

Two or more people can form a business partnership with nothing more than a handshake and a verbal agreement. When such an informal arrangement exists in Ohio, the partnership operates under the provisions of the state’s Uniform Partnership Act. Issues covered by the law include, but are not limited to,

  • Recording the legal name of the business partnership;
  • Listing the names of the partners;
  • Fixing the length, or term, of the partnership;
  • Listing the amounts of money and types of capital (e.g., building, equipment) each partner contributes;
  • Sharing expenses and revenues;
  • Setting rules for the operation of the business;
  • Assigning operational, managerial, and executive duties to partners;
  • Amending the agreement/contract;
  • Withdrawing as a partner; and
  • Dissolving the partnership.

A fully negotiated and written partnership contract will include provisions for all these and also address issues specific to the type of business, the identities of the partners, and the plans for growth.

Breaches of a Business Partnership Contract

As the partial list of the obligations spelled out in a business partnership contract shows, a partner can deliberately or unintentionally breach the agreement in many ways. Some typical examples of breaches include

  • Taking more than one’s share of profits
  • Withholding profits from partners
  • Failing to carry out specific duties or provide promised capital
  • Making business deals without input or approval from other partners

Help From an Ohio Partnership Agreement Lawyer

Probably the most important service an Ohio partnership agreement lawyer can provide comes in the form of writing the contract in consultation with the founding partners. Starting from the outline set forth in the Uniform Partnership Act, an attorney who has experience drafting business contracts can ensure that the partners address all essential issues and reach mutual understandings on how special circumstances will be addressed.

When a breach does occur, sitting down with an experienced Columbus contract attorney to review the terms of the agreement and to discuss responses is a must. Enforcing contracts almost always requires going to court. Sometimes, reporting a partner’s actions to police and regulators is necessary. Relying on advice and representation from a partnership agreement lawyer will protect the other partners.

The Jones Law Group offers full-service business and employment contract writing, negotiation, and enforcement services. You can request a consultation by calling our Columbus offices at (614) 545-9998. We have worked with business partnerships and joint ventures throughout Ohio, and we accept appointments online through this contact form.

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