What to Know about a Breach of Partnership Agreement
Breach of partnership agreement can be defined as a contract which details the rights & obligations of every partner in the business. If one party breaches the agreement, one will have a cause of action which can be taken against another or vice versa. Here, let’s discuss it further.
Causes of Action
Before we talk more about a breach of partnership agreement template, it is better to know about the causes of action. The following actions are just for one who breaches a written contract. Then, the remedies will help you get through the legal process.
The first is expulsion. It kicks out the partner who breaches the partnership agreement. It happens if the agreement states this as it is. In certain cases, you are not allowed to expel a business partner without dissolving the partnership. If an expulsion occurs in a bad manner, the damage charges may arise.
The second is settlement. It avoids time-consuming hearings as well as costly fees that need to be paid according to the legal matters. It makes both parties agree on the written settlement agreement that can be legally binding as a contract, too. In addition, it can also restore the partnership.
The third is damage liquidation. If a breach occurs, the contract states that the damage is liquidated in order to determine how much the party who breaches will pay another party. It breaks down the legal aspects the liquidation covers. But liquidating damages can be done if only there is a reasonable cause.
The last is breach liability. If the agreement of partnership has certain duration & another party leaves earlier, it means he or she breaches the agreement. The breach may be divided if that party has a reasonable cause to leave the partnership agreement of the business.
Kinds of Damages
In the partnership agreement breach, damages are sometimes classified into some types. Both parties have to understand about the damages. The first is consequential where it covers the losses that do not relate to the partnership agreement. The losses occurred because of the breach in agreement.
The second is expectation. It is the amount of cash that the injured party will get from the contract after a breach happens. Expectation damages will protect interests of the injured party as well as ensure that he or she will get compensated well.
The third is punitive damages where these are done in order to reform the defendant & others so that they do not do the same breach stated in the lawsuit. It does not intend to award the injured party. However, he or she might get some of it. You have to understand about it clearly.
The last is compensatory. This is the cash given to the injured party because of the damages like loss and injury. It is given as compensation. Since every partnership can be breached, every businessman should be able to make a breach of partnership agreement like what we have discussed here.
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