Partnership Disputes

Partnership Disputes

Partnership Disputes

Partnerships require business owners to be involved and reliant on one another more than any other business structure. Due to this, the partnership relies heavily on the personal relationship between co-owners. This means that a relationship must be strong and amicable for the business to run smoothly. If it isn’t, personal matters can bleed into business affairs. If the personal connection sours, that could mean a transition or end for the business. Below we’ll lay out some ways to make sure a partnership is built on a firm foundation.

Start Strong

Partnerships are born from a number of scenarios, such as by friends developing an idea together or people from the same industry who decide to branch off together. Partnerships exist across industries, including law and entrepreneurship. Signing a partnership agreement should be one of the first things you do when starting a partnership. This contract will define you and your partner’s roles and compensation. It is a good idea to hire a lawyer to draw up this agreement so that it is suited to your partnership. There are a range of terms that may be included, including share of equity, responsibilities, stake in the company, as well as terms that can protect you in the long run. The partnership agreement exists to avoid a list of scenarios that you may not ever imagine happening but could become possible down the line.

Being in a Partnership Dispute

Partnership Disputes usually can be traced back to money. Disagreements may arise if allocation of money is not clear from the start. This is why you need to have an agreement addressing shares, salaries, annual profit disbursements, and partner approvals required for spending money. If this is not sorted out before a dispute, it will be much more difficult to sort during a dispute.

Partners may also disagree about the trajectory of their business. Their visions might differ, making it difficult to run a business together. This is why goals and responsibilities need to be clear from the beginning. A mediator can be hired to help partners sort through a dispute. Otherwise, they may decide to dissolve the business or one partner may buy the other out.


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