Business Divorce and Breach of Contract: Learn More

If your business divorce could involve a breach of contract issue, you need to learn more about your legal rights. Business partners who break up may need to deal with ending contracts that they have formed while running their business. Facing this situation with your business partner? Then you need to determine whether you have a contract and how it might be interpreted. In other words, you need a business lawyer’s help to move forward.

Business Divorce and Contracts

The term “business divorce” refers to the breakup of an existing business. Partners may mutually decide to break up, the business may get sold or go under, or one partner may want to leave. In any of these situations, you need to know your rights. Business divorce almost always involves a contract between you and your partner or partners. It also may involve contracts with other businesses and individuals. Sometimes breach of contract issues become important in business divorces. If you are not sure who you have contracts with and how they will affect wrapping up the business, it is time to get some legal advice.

A business lawyer, such as the experienced ones at Henke, Williams & Boll, can review your case to determine the terms of your contract with your business partner. You also need to know if you have any contracts that your business made with suppliers, purchasers, or other third parties. Even if you did not put all these agreements in writing, you still might have oral contracts that you need to follow. Figuring out the terms of these contracts is your first step.

What Are the Terms of Your Contract?

First, your lawyer will help you determine the terms of any contracts that you and your partner had with each other or third parties. If there is a written agreement, then your lawyer will carefully review what it says. As part of the business divorce, you need to know a few important facts that may be written down in the contract:

  • How do you break up the business if one or more partners want a business divorce?
  • What would be considered a breach of contract as you undergo the business divorce?
  • Has your partner or a third party already breached the contract, potentially giving you grounds for unilaterally terminating the agreement?
  • Can you end the contract before its stated end date, and are there penalties for doing so?

A contract between business partners may describe each partner’s investment in the business, how he or she will receive profits from the business, partners’ responsibilities, and how to end the partnership. A contract between your business and a third party may describe the obligations you have to each other (e.g. supplying a certain amount of a product on a regular basis in exchange for money), and what happens if you do not fulfill your obligation. Formal contracts of these types often include clauses describing how to end the contract and what would constitute a breach of contract.

How Do You Accomplish a Business Divorce According to the Contract?

If your contract includes information on how to end the contract, then you have a starting place for your business divorce. In addition, if you believe that another party has breached the contract, you may have grounds for a business divorce or ending the contract. It depends on the specific terms of the contract in question. As an example, your partnership agreement may state that you and your partner will sell off business assets and divide remaining money and property evenly, should you have a mutually agreed-upon business divorce.

What If the Contract Is Silent About Business Divorce?

Not all contracts describe what will happen if you need a business divorce. You may have a verbal agreement, or your written agreement may be silent on this point. It is very important to get a lawyer’s advice about this situation because a misinterpretation of your agreement could lead to accusations of breach of contract.

Your lawyer will review the contract in question to analyze any ambiguities, determine which oral testimony could be used to support an interpretation of the contract’s terms, and review your course of dealing with the other parties for evidence that could be used in court. As you proceed through the business divorce, the legal interpretation of your entire agreement could become very important. Make sure you get knowledgeable legal advice to help preserve your rights.

Let Us Help with Your Business Divorce

At Henke, Williams & Boll, we advise business partners who need business divorces. When breach of contract issues arise during a business divorce, we know how to help. Our experienced Houston business lawyers help clients find the best solution possible using personally tailored legal advice. To set up a consultation, call (713) 936-5521 or use our convenient Contact Form on our website.

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