A partnership is a legal relationship that arises whenever two or more people engage in business together for profit. Often, the partners create a partnership agreement. The document is a contract; it describes the relevant duties, rights and obligations of each partner. If one partner does not comply with the terms of the contract, the other partners may have a cause of action against that person.
The primary cause of action regarding a partnership agreement is breach of the partnership agreement. It is a contract case. The plaintiff must prove three main elements: the existence of a contract, actions that constitute breach of the agreement and that the plaintiff suffered some form of damages resulting from the breach. A written partnership agreement, signed by each of the partners, is strong evidence of the existence of a legally binding contract. Actions that constitute breach depend on the individual circumstances.
Advertisement Article continues below this adA breach of contract occurs whenever one party to the contract does anything in contrast to the written or implied conditions of the agreement. With regard to partnership agreements, the plaintiff should read the contract carefully and determine what facts, if any, constitute a breach of one of the express provisions in the agreement. For example, if the agreement calls for each partner to contribute $100,000, but one partner contributed only $60,000 and refuses to contribute more money, the partner who refuses to contribute more money could be liable to the other partner for the remaining $40,000.
Partners are bound by duties that may not be expressly written in the contract. For example, the partners owe each other a fiduciary duty -- they cannot engage in self-dealing or conflicts of interest. Breach of fiduciary duty is also a viable legal theory for liability.
Advertisement Article continues below this adPartners need to be aware of potential legal issues that could affect the partnership in general. According to Lawyers.com, unless the partnership agreement contains specific provisions for removing a partner, the partnership may dissolve if a partner is expelled.
Pursuing a breach of contract lawsuit is a legal process. You may be able to resolve disagreements privately without involving the court. The chances for successfully resolving the issue depend on a number of factors, including the severity of the breach. Whether you intend to pursue a formal lawsuit or work out the matter, you should seek independent legal advice.