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Texas Restaurant Law

Partnership Mistakes and How to Avoid Them

Posted in Acquisitions, Competition, Contracts, Corporate Entity, Franchises, Intellectual Property, Litigation, Real Estate, Vendors

bad partner

Nearly anyone who has been in business either knows of or at least has heard of the pitfalls of partnerships. However, a lot of people don’t know that you can be partners with someone and not even know it.

You might say, “Funny lawyer. Who cares?” But you should care, and here’s why.

Partnerships make each partner liable for the bad acts of all of the other partners. Thus, if your partner lies, commits fraud, embezzles bank money, or defaults on a loan, you could be liable.

If you’re still skeptical, consider this: the de facto entity in Texas is a partnership. Thus, anytime you do ANYTHING with another person in business, it could be considered a partnership. That’s why, if you read the fine print, many vendor contracts specifically state, “Nothing here is or should be considered a partnership.” The reason for that language is to keep them from being liable for what you do.

Therefore, the next time you loan money, start a new restaurant, enter into a new franchise, or do business with anyone, just keep in mind that it could be a partnership and consider what they may do that could cause you liability.

Has this ever happened to you? Have you ever been liable for something you didn’t intend? Share your stories with us!

About the author: Matthew Sanderson is a transactional and real estate lawyer focusing on restaurants in Texas. “Good service with a smile” is his motto. Click here to find out more about Matthew Sanderson’s legal practice and how he can help you today.