Protecting Both Business Finances And Futures

Managing partnership disputes

On Behalf of | Sep 16, 2019 | Business Litigation |

Though your partnership may be in its early stages, issues can occur that result in disagreements and conflict. Disputes can disrupt business operations and create a variety of financial and legal challenges. Having a solid plan in place to address them may prevent business litigation, help strengthen your company and keep it going strong for years to come.

Here are a few possible strategies to employ when dealing with business disagreements and disputes.

Partnership agreement

To prevent legal and liability issues in the event of a conflict or the breakdown of a partnership, create a contract that defines all partnership roles, responsibilities and expectations. Do not forget to identify the official company title of each partner and his or her financial contributions and compensations.

Mediation and arbitration clauses

When a dispute arises, it often helps to have a neutral third party to provide clarity and suggest workable options to resolve conflict and foster agreements. You may want to include a clause in your partnership agreement that requires mediation before either party may resort to litigation.

Arbitration is another way to resolve disputes without going to court. Judges have knowledge of the law, but they may not understand the nuances of your type of business. Arbitration allows you and your partner to appear before an arbitrator who may also be an expert in your field. This person can listen to both sides and issue a decision in much the same way that a judgment would be given in court.

Exit strategy

An exit strategy is something to put into place at the beginning of the relationship. If moving forward together is not an option, you and your partner may agree that it is better to sell the business, split the profits and begin again, or give either partner the option to buy the other out. You could also agree that one partner may sell his or her interest to a third party. The business structure you choose could affect your exit strategy options, so it is important to consider this factor early in the process.



FindLaw Network