What To Do When There’s A Breach Of Partnership Agreement

Going into business with a partner can be a successful way of running a business. However, if you have a falling out with your partner or they breach the Partnership Agreement, things can go wrong very quickly.

Here’s what you need to know if you’re dealing with a business contract breach:

  • You should always have a written Business Partnership Agreement
  • Seeking legal advice as soon as possible will help mitigate any damage to your business
  • Most business contract breaches are resolved with mediation and negotiation

Getting the right advice can help you navigate difficult legal situations.

Do you have a written Partnership Agreement?

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A written Business Partnership Agreement will often include what must happen if there is a dispute, a breakdown of the relationship, or if one partner breaches the agreement. The dispute resolution process will typically include mediation and negotiation.

If you don’t have a written Partnership Agreement or if it doesn’t include dispute resolution processes then it will likely be more difficult to resolve the problem. Again, it is usually best to try mediation and negotiation first, but if that doesn’t work the matter will need to be referred to the appropriate Court for judicial determination.

What should you do first?

Seeking legal advice as soon as possible is one of the most important things to do when dealing with a breach of Partnership Agreement. Whether you have a written agreement or not, a lawyer will be able to assist you through the process.

Getting legal advice on the best course of action for your specific circumstances will help you minimise any potential damage to your business. As with any legal matter, the sooner you seek legal and advice the better. Your lawyer will be able to:

  • Advise you on your options and the best course of action for your case
  • Assist you with the mediation and negotiation process
  • Represent you in Court if necessary or organise representation for you

How are most Partnership Agreement breaches resolved?

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In most cases, a business contract breach is resolved with mediation and/or negotiation. This is almost always preferable to taking the matter to Court.

However, if mediation and negotiation fail to resolve the dispute, formal legal intervention is required and Court action must be commenced. Going to Court usually makes the dispute much more expensive and stressful.

This is one of the reasons why it is so important to have a well constructed business Partnership Agreement. It will clearly set out what each party’s obligations are and what happens if one party breaches those obligations.

Having each party’s obligations as well as dispute resolution provisions clearly laid out will help to save costs in the event of a breach.


Margaret and Heather

Margaret and Heather went into partnership in healthcare services, and their relationship broke down when Margaret ran off with a whole lot of the assets. There was no formal Partnership Agreement, and Heather had to take Margaret to the Magistrates’ Court after mediation and negotiation failed.

In the end, the Magistrates’ Court ordered that the assets Margaret took must be returned, all debts were to be paid equally, and any profits distributed equally.

Lindsay & Tobias and John & Alex

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Lindsay & Tobias decided to start a cleaning business with another couple, John & Alex. The relationship broke down, and John & Alex wanted to go their own way with certain clients, leaving Lindsay & Tobias with certain clients but also a lot of the debt on a credit card.

There was no formal Partnership Agreement, but the two couples were able to negotiate a resolution that the debts be paid equally.

Rose Lawyers can help

Whatever the circumstances of your business contract breach, we can help you through every step of the dispute resolution process. Whether you have a formal Partnership Agreement or not, we can help.

We have a great deal of experience dealing with all kinds of business law matters and have handled many Business Partnership Agreements and disputes for our clients.

For expert advice on your Business Partnership dispute, call us on 03 9878 5222.