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Three options when you and your partner have a business dispute

On Behalf of | Sep 26, 2021 | Business Litigation

Going into business with a partner can be a rewarding experience. Having someone to share the highs and lows of business ownership with you can help provide a variety of opinions and insights into your enterprise as well as share the workload.

But, like any relationship, sometimes business partners disagree on an issue regarding the business. These disagreements can sometimes spiral into disputes with legal consequences that could threaten the viability of the business itself as well as the relationship between partners. The following are some ways business partners can try to resolve their disputes without resorting to litigation.

Option one: Refer to your partnership agreement

Before you went into business with your partner you may have entered into a partnership agreement. This agreement may have provisions regarding what to do in the event of a business dispute. Having these processes already laid out can sometimes help talking things out run more smoothly. Sometimes partners are simply able to talk their issues out among themselves or perhaps with the help of an attorney and come to a resolution that is mutually satisfactory.

Option two: Alternative dispute resolution

Sometimes a partnership agreement requires partners to utilize mediation or arbitration to resolve disputes. Even if your partnership agreement is silent on this matter or perhaps you do not have a partnership agreement at all, mediation and arbitration can be positive ways to resolve disputes.

Mediation is a process in which partners work with a third-party mediator to discuss their situation with the goal of reaching a resolution. The mediator is a neutral party that is not a decision-maker. Instead, the mediator helps facilitate conversations between partners as they negotiate a resolution. You can still be represented by an attorney if you choose mediation.

Arbitration is more formal than mediation but less formal than litigation. An arbitrator is a neutral third-party, but unlike a mediator an arbitrator is a decision-maker, and the parties are generally bound to the decision of the arbitrator. In arbitration, each side can present their case and present evidence. However, the rules of evidence and proceedings in arbitration are less formal than at a trial. Like mediation, you can be represented by an attorney if you decide to pursue arbitration.

Option three: Part ways

Sometimes disagreements are so deep that partners simply feel they can no longer work together. Rather than try to litigate their way to a “win,” it is sometimes easier for partners to simply part ways. One partner may buy out the other partner’s share in the business, allowing the business to continue. Or the business partners may decide the best option is to sell the business altogether and split the proceeds. While this may seem like a drastic measure, when disputes hit at the heart of the business it may be worth considering whether the business can remain viable due to this dispute.

Explore all your options for resolution

This post offered some suggestions for business partners facing a disagreement that would allow them to avoid litigation. However, sometimes litigation is a viable option as well. These decisions can be difficult to make. Fortunately, help is available to business partners in New Jersey who are going through a dispute and need some guidance.

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