When you and your partner entered into business together, you may have done so because you had a strong level of trust between you. What happens, though, when your partner breaches the terms of a contract and breaks the trust that exists between you?
Per the Houston Chronicle, you may have several forms of recourse available to you when your business partner breaches a contract. When this occurs, consider taking the following actions.
Attempt to hold him or her liable
Depending on circumstances, it may benefit you to sue the partner who broke your agreement. If your partner misappropriated funds, for example, you may want to file a lawsuit against the individual seeking compensatory damages. If your partner abandoned your partnership, your ability to attempt to hold him or her liable depends on whether your partnership agreement had a set duration. If it did, you may have grounds to sue.
Pursue liquidated damages
In some cases, you may be able to seek compensation from a partner whose breach cost you money. To do this, your partnership agreement must have had a liquidated damages clause that a court considers reasonable.
Negotiate a settlement
Sometimes, negotiating a settlement with your partner may serve you well and save money and time in the long run. This may be a good way of potentially preserving the relationship that exists between you and your partner, should it benefit you business-wise to do so. You may, too, be able to sue your former partner and then settle on terms that are advantageous to you during negotiations.