Monday, March 31, 2008

Effects of Breach in Partnership Agreements

I happen to read, by chance, the suit filed by Amazon against Expedia for a Partnership Breach. Despite such breach, Amazon continued to renew its ties Expedia. Ir is interesting to know how breach occurs and what happen when it does occurs.
Well, suits like that often happen between partners or between a partner and the partnership for breach in their partnership agreements. This is because of the principle of “delictus personarum” or the mutual trust and confidence expected from and among the partners themselves which entitles the partners to choose who should be the other partners in their business. If one of the partners has failed to fulfill with his or her obligations to the partnership, a breach exists which gives the injured party a cause of action against the erring partner.
Another peculiar characteristic of a partnership that separates it from a corporation is that each partner acts as the agent of the other partners and of the partnership. As such, if there is any violation or failure of one partner to do what is expected of him to do under the partnership agreement, he will be held liable not only to the other partners or to the partnership itself but also to other persons who dealt with the partnership as well.
Breach of partnership is in effect breach of the mutual trust and confidence reposed upon a partner. In case of betrayal by the other partner, the other party has the option to either continue with the partnership or expel the erring partner.