Business and corporation laws set the limits of operations for most business enterprises. But sometimes businesses exceed the boundaries of competition and even proceed to compete with their own individual businesses themselves.
In the article, “California Court Limits Partnership Non-Compete Agreements”, posted June 2006, it shows clearly how the court has settled the dispute between the competing general partnership business and each partner’s individual businesses. In enforcing the law, the courts invoked Section 16600 of the California Business & Professions Code, which is the established policy for covenants not to compete.
The case begun when two persons allegedly formed a general partnership business engaged in developing warehouses. The partners apparently amended their partnership agreement to limit the partnership activities to a specific series of development projects, but did not amend the non-compete agreement.
When one of the partners learned of the outside development activities of the other party, he filed a lawsuit on the grounds that his partner's activities violated their covenant not to compete. In the case, the courts favored the plaintiff based on the non compete agreements of the law.
Signing partnership agreements in business has its risks. But in order to know whether you are entering a good contract, it helps to know some important things to consider before signing a contract.
A good business contract must contain the following information:
- The description of all obligations to be fulfilled
- The description of all obligations each party expects the other to fulfill
- Limitation of liabilities
- Set parameters, such as a time frame, in which the terms of the contract will be met
- Set terms of a sale, lease, or rental
- Establish payment terms
- Clearly establish all of the risks and responsibilities of the parties
Partnerships and contracts can sometimes spell the difference between success and failure in business. A well-drafted contract is vital to business can increase your income, earn respect, and give you a feeling of satisfaction. On the other hand, a bad contract can be disastrous and could cause the downfall of your business.