Operating a business with another party can be an excellent way to share responsibilities and expenses. Under the best of circumstances, you and your partner or partners will have a shared vision and understanding of how to best run the business. However, there can be times when partners disagree on minor and significant issues. In either situation, you will want to know how to prevent or manage these matters before they escalate. Here is more on how to avoid and resolve partnership disputes.
Planning Ahead
When you initially form your partnership, it can be an exciting time when both parties are enthusiastic and eager to get operations underway. While wanting to get your business up and running is understandable, it’s also important to take the time to consult with an experienced business law attorney. Your business lawyer can review your business goals with you and help you develop a partnership agreement that plans for the future, protects your interests, and supports your goals.
Developing Partnership Agreement Terms
Partnership agreements should include terms that clearly identify the parties’ roles and responsibilities and address contingencies that may arise in the future. The agreement will be there to provide clarity and to help the partners avoid conflict. If you have a limited liability partnership, you may have an operating agreement. Partnership and operating agreements generally contain terms that address the following:
- Each partner’s contribution and role
- Partner decision-making authority
- Partner contributions
- Payment and distribution
- How the partners will make decisions
- How the partners will take formal action
- Dispute resolution
- Adding partners
- Partnership dissolution
- Partnership termination
- Business sale or buyout provisions
- Business wind up obligations
Why Do Partners Have Disputes?
Partners can disagree over various types of issues. Some of the most common reasons may include:
- Conflict of interest
- Different opinions regarding business decisions
- Decision-making authority
- Possible Fraud
- Interference with a Contract or Client relationship
Resolving Partnership Conflict
If you and your business partner have conflicts, there are various ways to address these issues. In some cases, it may be helpful to go to mediation. Mediation involves both parties and their attorneys working with a trained mediator to try and resolve their dispute. Partners with a formal agreement may have already agreed upon using specific dispute resolution methods.
Disputes can happen in business. However, not every partnership conflict will rise to the level of needing mediation or becoming litigious. You and your business partner may be able to resolve your issue by remaining calm and focusing on the well-being of your business. If you need assistance in formulating an approach for talking with your partner, you should consult an experienced business law attorney. Your business lawyer can help you analyze the situation and develop a strategy to address and resolve the issue.
Ending the Partnership
Not every partnership is meant to last. It may be that you and your partner have reached an impasse for a reason and that it is time to move on. If that is the case, you may want to devote your energy toward winding down your operations. You may also want to consider selling your business interests, buying the other party out, or taking over the enterprise and merging with another entity. You will want to work with an experienced business law attorney when assessing these and other business transition options.
Contact an Experienced Florida Business Lawyer
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with commercial leasing, business, and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.