How Can a Business Partner Disagreement Be Settled?

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In an ideal partnership, you and your business partner work together to create a successful enterprise. But we know that things don’t always turn out like this, and disagreements between partners can happen. The resolution for these types of disagreements depends on the legal structure of your business and on the type of planning that has been done when the company was formed.

Causes of a dispute are varied but often involve disagreements regarding business management, allegations of misconduct by one of the partners, disputes over how resources are allocated or distributed, or disagreements about the terms of the partnership agreement and unequal workload distribution between partners.

What If a Dispute Can’t Be Prevented?

It is safe to say the best way to deal with business partnership disputes is to prevent them from happening in the first place. This means having a solid and comprehensive partnership agreement to manage each partner’s expectations and to ensure they have a clear understanding of the partnership.

For that reason, it is a good idea to rely on a Clarksville estate planning attorney to draft your partnership documents and advise you on all aspects of the partnership agreement. He or she can also assist you in making sure the agreement covers everything necessary for your partnership to go smoothly, including dispute resolution procedures and the confirmation that those are understood by all partners and shareholders. Another thing you should consider adding to your partnership agreement, besides a dispute resolution provision, is a buyout agreement that allows the partners and shareholders to buy out the share of a nonperforming partner.

An Ongoing Dispute

If, however, the dispute is already occurring, your first move should be to try and resolve it through negotiation before taking more formal legal measures. If you are able to engage in an informal discussion with your business partner in private and reach some kind of compromise before bringing the issue to other partners, it might save you time and restore your partnership.

If the dispute is too large to be resolved through simple, informal negotiation, then you may need to resort to mediation procedures with a neutral third-party. This type of service is often less costly and less time-consuming than traditional litigation. If your partner, however, is not agreeing to mediation and has turned down any buyout offers, it may be necessary to begin litigation according to your state’s business laws.

How Can an Attorney Help?

To sum up, the best resolution to partnership disputes is preventing them from happening through proper planning at the business formation stage. If it is too late and there is an ongoing dispute, you may resort to negotiation, mitigation, or formal litigation to resolve the dispute. This often results in the partnership being dissolved or in a judge determining the liquidation of the entire business, depending on state laws. Litigation should only be pursued if every avenue for dispute resolution has been exhausted, and no deal has been reached.

Our business attorneys at Crow Estate Planning and Probate, PLC can handle a variety of business formation cases and disputes and are ready to help you. Contact us to get your questions answered and learn about your options.

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