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Business conflicts can lead to partnership disputes

On Behalf of | Apr 1, 2022 | Business Litigation

When you go into business with a partner or partners, there is generally a mutual understanding of how the business should be run, what the goals for the business’ future are, the scope of the business itself and the rights of each partner. These details, often documented in a partnership agreement, can work well for many years but that does not mean disputes between partners do not arise. They do, and with more frequency than you may think. What can you do if you have a dispute with a co-partner?

Refer to your partnership agreement

If you have a dispute with a co-partner, first review your partnership agreement for clauses on dispute resolution. For example, the partnership agreement might dictate that partners try settling their dispute before taking more drastic measures that could affect the rights of the other partners or the viability of the business itself. One way to do this is through mediation.

Mediation

n mediation, each partner to the dispute will sit down with a third-party mediator who will serve as a sounding board between partners as they work out their issues. The mediator can help the partners reach a new agreement that works well for them and the business. Mediation can be a good way to resolve partnership disputes.

Get a ‘divorce’

Sometimes alternative dispute resolution processes do not resolve a partnership dispute. If this is the case, two options are to undergo a buy-out or shut the business down altogether. This may seem like a last resort, but sometimes it is best for partners to simply go their separate ways. This is especially true if partners have conflicting values or different ideas for the vision of the business that cannot be resolved. For example, one partner might want to expand the business in ways the other partner does not agree with. Alternatively, one partner’s core values for the business may differ so much from the other partner’s core values that it corrodes the trust and respect the partners have for one another. Sometimes a business “divorce” is necessary for both partners to grow their careers and opportunities.

You have options

It is important to remember that if you have a dispute with a co-partner, these disputes can often be worked out and you may have several options at your disposal. With the right help, you can land on a dispute resolution option that is best for you and your business.

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