Legal Question in Business Law in California

Since you are asking from Zip code 20710, I'll have to start out by saying that my response is based upon California law. Firtunately, partnership law is fairly uniform from state to state.

I'd say that "parameters" or terms and conditions set forth in a partnership agreement could fall into either of two categories: (1) terms and conditions that are clearly "conditions precedent" to the formation of the partnership, and (2) terms and conditions clearly meant to guide and control the operation of the partnership, post-formation. The answer to this question will govern whether the breach of agreement in question should be considered under partnership law and the persons involved treated as partners, or whether, on the other hand, there is no partnership and the matter is a simple breach of contract.

Now, does the failure to meet a parameter cause the agreement to become void? Probably not. In most cases, failure to meet a parameter will simply constitute a breach of the contract, not render it void. Under California law, the essential elements of a contract are (1) parties capable of contracting; (2) their consent; (3) A lawful object; and (4) A sufficient cause or consideration. When these elements are present, the contract isn't void, although it may be breached. It still exists, still binds the parties, and gives rise to the usual remedies for its breach.

I hasten to add that just because a contract in only breached, and not void, does not mean that a non-breaching party is still under obligation to perform under the contract. Often, a substantial breach by X to a contract between X and Y will result in Y being relieved of his duties to perform. This occurs when X's breached obligation is a "condition precedent" to Y's performance. An obvious example is when X agrees to paint Y's house for $1,000, payable upon completion. If X fails to paint, Y is under no obligation to pay. In real-world contracts, it is often much more difficult to figure out whether X's performance is a condition precedent, subsequent, or concurrent with Y's performance.

So, all in all, I'd guess that these partners have a valid contract that has been breached, rather than a void or even voidable contract, and that a partnership may exist wherein one or more partners or the partnership itself may have grounds for a breach of contract suit against the non-performing partner, but other results are possible, although less likely. I suggest you have the agreement and the breach looked into by an attorney in the jurisdiction where the partnership was to operate.