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Dissolving a partnership? Make sure a survival clause is in place

On Behalf of | May 31, 2024 | business litigation

A friendship may not survive a business venture. While there is no contract for the friendship, both partners must adhere to the contract they created at the start of their venture to dissolve the partnership.

In a previous blog post, we addressed when business owners should make use of survival clauses in their contracts. There, we mentioned how survival clauses can protect one’s intellectual property when forming a new partnership. However, what about when the partnership has reached its end?

These clauses do more than protect IP

As discussed in the past blog post, a survival clause ensures that certain terms of the contract continue to apply for a specified amount of time – even after the partners terminate the contract and go their separate ways. Establishing such a clause can certainly help keep intellectual property safe. It can also:

  • Protect both parties, even after the partnership ends
  • Preserve the reputation of the business
  • Keep specific matters private
  • Extend the rules of conflict resolution, as they pertain to business matters

Like other elements of a contract, you can customize a survival clause and include the terms of the contract that are necessary for your situation. That way both partners can secure their own interests as well as those of the business.

They can also protect the future from the past

It is no secret that the end of a business partnership – as well as a friendship – can be complicated. The other party may resort to personal attacks or even escalate disputes until it requires litigation. Including a survival clause in your initial contract is one way to reduce the risk of both of these issues, while protecting your future in the business world.

This protection will also be necessary if you are ending the partnership but continuing the business in any capacity.

California business owners must ensure they follow all of the procedures necessary to dissolve their partnership or business. However, it is critical to be proactive in order to secure the future in this process.