A partnership dispute is an argument between business partners, usually concerning issues related to money, duties, and misconduct. Although these disputes can be stressful because they could cause damage to your reputation and financial losses, they don’t have to land you in court.
There are effective ways to deal with disagreements with a business partner, and a lawyer from ContractsCounsel can help. This online legal marketplace connects clients with experienced business lawyers who can assist you during a legal dispute so you keep things professional while protecting your priorities.
In the rest of this article, we explore common partnership disputes, how to prevent them, and how to deal with them. We also provide advice on when you should contact a lawyer to guide you through the process.
What Causes Partnership Disputes?
Disagreements between business partners can be caused by various things, such as:
- Different expectations. If partners clash over their goals and expectations, this could cause arguments and delays in business operations.
- Lack of communication. This can make decision-making and dispute-resolution processes challenging.
- Finances. Money is a big cause of disputes, such as in terms of agreed-on salaries and nonpayment.
- Contracts. If the partnership agreement is vague or confusing, this could spark disagreements between parties. One client could also be in breach of the contract.
- Termination. When one party wants to end the working relationship, the other party might not agree with their decision. Partners might argue over how they’re allowed to leave the business.
How Can You Prevent Partnership Disputes?
There are ways to prevent a partnership dispute from arising and causing problems.
Have Check-ins About Goals and Growth
What kind of growth strategy do you want the business to have? What are your business expectations? It’s essential to discuss these with your partner early on in the working relationship, and check in with them regularly. If you make any changes to your value statements or team goals, make sure you document them.
Discuss Disagreements Early
You can sometimes tell that a dispute is growing, such as if there’s confusion over duties or finances. Addressing the issues as soon as they appear prevents them from escalating and causing larger problems that are more difficult to resolve.
Keep Accurate Financial Records
Financial transparency encourages trust between partners and makes it easier to work on your business strategy. When everyone is aware of the financials, it prevents uncertainty that can lead to disagreements.
Draft a Contract
It’s essential for your business partnership contract to be clear, legally enforceable, and comprehensive. It needs to contain important clauses, such as pertaining to payment, duties and responsibilities, and scope of work.
You can hire a professional lawyer from ContractsCounsel who is experienced in drafting and reviewing partnership contracts. They’ll ensure that your agreement is fair and free of any confusing or vague terms that can cause misunderstandings.
What Should You Do During a Partnership Dispute?
As with any dispute, you want to deal with it promptly so that you reduce tensions and prevent legal battles. Here are some things to do.
Refer to Your Partnership Agreement
Your first course of action should be to look back over your partnership contract for terms and clauses that apply to your dispute. Check the contract for dispute-resolution strategies, which can guide you on what processes need to be conducted, such as mediation or arbitration.
Chat to the Other Party
The best thing to do when a dispute arises is to try to communicate with your partner. Give each other a chance to express your concerns and try to find a resolution that benefits both of you.
By doing this, you might be able to get back on track without the expenses of a legal battle.
Communicate in Writing
When attempting to solve the issue one-on-one with your partner, write down your negotiations and settlement, if you reach one.
Record all communications so that you have a document on which to build a case. This is especially important if you’re dealing with a hostile situation.
What are the Legal Actions to Take During a Partner Dispute?
Once you’ve tried to negotiate with your business partner, if you can’t reach a resolution, there are legal strategies you can try.
Mediation
Mediation involves hiring a third-party mediator to facilitate communication between you and your partner. This enables constructive discussions, strong working relationships, and reduces tension. It’s ideal if you and your partner have poor communication or can’t seem to compromise.
Arbitration
This is a more formal process than mediation. It involves hiring a third-party arbitrator who listens to both of your cases and then delivers a final, binding decision to help you move forward.
Litigation
For more serious situations, such as breach or fraud, litigation is when you and your partner go to court to settle the dispute.
When Should You Contact a Lawyer for a Partnership Dispute?
Partnership disputes can be complex, so it’s good to hire a lawyer as soon as possible. If your first dispute-resolution method is to negotiate with the other party on your own, you should consider hiring a lawyer if:
- Your communication has broken down, such as if the other party isn’t talking to you.
- You’re dealing with serious issues, such as contract breach or fraud.
- You’re unsure of how to navigate the dispute-resolution process.
Benefits of Hiring a Lawyer
Generally, there are many advantages of hiring a lawyer to help you through a partnership dispute.
- Lawyers will help you if your dispute goes to court. They’ll gather evidence and represent you.
- They can facilitate discussions, such as during mediation.
- They will draft legally-sound and transparent partnership contracts that prevent future disputes.
- They’ll review your contracts and documents for any red flags, loopholes, and to help you gauge the strength of your position.
- They’ll provide professional advice on the best legal solution for your dispute.
- They’ll negotiate on your behalf to help you reach a favorable settlement.
Do you need a lawyer for a partnership dispute?
Visit ContractsCounsel, where you can connect with a vetted business lawyer who is interested in your case and can help you navigate a stressful partnership dispute with ease.
