Understanding Partnership Disputes

It is one thing to own a business. It is a whole other matter to share ownership of a business. Business partners will always be prone to disputes. At the very least, there are fiduciary duties and obligations that partners have to one another and to the business itself. Partnerships also tend to be personal and relationships can develop that result in emotional conflict.

As a business law attorney, I can evaluate your matter and explain your rights. The following are important issues to understand:

Why do partnership disputes occur?

The list of reasons behind partnership disputes is about as long as the list behind any type of dispute. Let’s start simple. Maybe one partner feels the other partner is not doing his or her fair share. It could be that partners have a different vision for the partnership's direction.

Other reasons are less subjective. One partner may be misappropriating or diverting partnership assets. Another partner could be secretly competing with the company. Either one could feel that the other is overstepping their bounds or authority.

Then, there are very specific personal problems. You may not trust or respect your partner. What if your partner threatens you? What if your partner has an unhealthy addiction? Do you think that he or she takes too much vacation? Perhaps your customers simply do not like the person. These disputes can stem from any one or combination of so many variables.

How are partnership disputes resolved?

Conflict resolution depends on effective communication. Remaining objective despite rampant emotions is crucial. Before initiating a legal action, partnership mediation via a third-party might be a good idea. In connection with the mediation, a business law attorney should be consulted either as a representative of the partnership or of an individual partner. The same attorney cannot represent the individual partner and the partnership given the potential conflict of interest. A business law attorney will assist with ensuring that the rights and obligations under a partnership agreement or under the partnership statute are being followed.

How can partnership disputes be avoided?

After reading the above, you may want to know what can be done to avoid partnership disputes. The simple answer is to choose wisely. Choosing a person you get along with can help steer clear of most of the reasons listed above. That does not mean you should not have a comprehensive partnership agreement in place. Whether you are in business with family or friends, get everything in writing. A partnership agreement goes a long way toward avoiding misunderstanding.

If you own and operate your business with a partner and have any questions regarding a dispute or related issue, do not hesitate to contact this office for an appointment.