Legal Question in Business Law in California

Breach of Contract

I'd appreciate any help anybody here could give me on this.

I entered into a contract with a Partner to develop a document management software in August of 2008. Prior to this I had signed a contract between a client and my own company to build this particular client a document management software. Because I had a lack of funds to hire a technical advisor, I entered into the 50/50 Partnership Agreement with my cousin assuming he would contribute equally to the Partnership. We followed this up with creating an S-Corporation in California under the same name mentioned in the Partnership Agreement.

As time passed it became clear that my Partner was taking advantage of the situation and not contributing his share to the business. The client that the software was being developed for began getting frustrated as it was taking too much time to deliver the software. Two weeks ago I dissolved the corporation with the State of California because I had 50% of the shares.

I feel that I am entitled to walk away from this partnership because:

1)At the time the corporation was dissolved, there was no actual software product created.


Asked on 2/09/09, 2:56 pm

4 Answers from Attorneys
Bryan C. Becker Your Lawyer for Life.

Re: Breach of Contract

Your question may have been cut off, but I believe your bigger concern is the non-delivery of software product to the third-party. California has very specific requirements for dissolution -- including notification requirements.

You should send out actual notice those you did business with -- your customers, your suppliers, your clients -- announcing the dissolution.

Typically, the partner who initiates the dissolution is the one responsible for sending the notice, or -- if the company is going to continue in another form -- the new entity would announce the dissolution and the new company name, if applicable.

You should have an attorney review all of your contracts, leases, and loan agreements to see if the dissolution will affect them. Sometimes these become null and void if the partnership dissolves. Or they may state that none of the partners can drop out of the deal during the contract period. If you neglect post-dissolution procedures, such as negotiating new terms with a bank or landlord, a partner with deep pockets could get a major shock in the form of a lawsuit if the remaining partners default.

If you would like to discuss specifics, feel free to contact me.

Yours truly,

Bryan

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Answered on 2/13/09, 12:10 am
Michael Stone Law Offices of Michael B. Stone Toll Free 1-855-USE-MIKE

Re: Breach of Contract

This would be a great problem to take to the attorney whom you hired to draft your contracts, or whom you consulted before signing them. If there is no such attorney, where did you get these contracts, and why did you sign them? No attorney can advise you without reading all the contracts and gathering other relevant information by interviewing you.

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Answered on 2/09/09, 3:02 pm
Terry A. Nelson Nelson & Lawless

Re: Breach of Contract

If and when you get sued or threatened, feel free to contact me for the legal help you'll need. You'd be well advised to get counsel to try to resolve the problems before they turn into litigation. Feel free to contact me if serious about doing so.

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Answered on 2/09/09, 3:33 pm
OCEAN BEACH ASSOCIATES OCEAN BEACH ASSOCIATES

Re: Breach of Contract

You may hire an attorney to draft closing agreements and releases. Contact me directly.

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Answered on 2/10/09, 9:32 pm


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