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When business partners argue: options for resolution

On Behalf of | May 6, 2022 | Business Law

Like a family, many business partners find success by putting all of their emotions and dreams into the partnership. It is only to be expected from driven, entrepreneurial people. But those emotions can run too high when there is a dispute between partners.

In an ideal scenario, the same commitment to success that all partners bring to the business would be matched by a commitment to work things out. If this is the case, then there may be options to sort things out amicably. There are other instances, however, where taking legal action against a business partner may be the best course of action.

Why partners fight

There are many reasons why a dispute can arise between partners. Unanticipated success can cause just as much stress as difficulties and hard times. Whatever the cause, there are three main types of disputes between partners:

  • Where and when to allocate resources, including money and time
  • What direction the partnership needs to take and what specific instruction needs to be given to employees
  • Who owns or controls intellectual property, including patents and trademarks

It may not seem helpful to reduce your dispute to a category, but getting at the heart of the problem is often the first step towards resolving it. Taking a step back and evaluating what is really at stake, rather than the argument in front of you, can be very helpful.

What is in your agreement?

Disputes are almost inevitable in any partnership. That is why a dispute resolution mechanism is a critical part of any partnership agreement. The process can call on a trusted advisor, a mediation process or any method that you agree to.

Despite the importance of dispute resolution, far too many partnerships lack such a clause in their agreement. Standing in the middle of a dispute may seem like exactly the wrong time to discuss a procedure, and it very much is. You should have your dispute resolution process in place before there is a dispute.

When an agreement isn’t enough

If you’re already in the midst of a dispute with your partner, and you don’t have a procedure in place for resolving it, then it may be worth exploring other options. Maybe there have been serious missteps by your business partner – such as a breach of fiduciary duty, negligence or even abandonment. In such cases, pursuing litigation may be the best option.

An attorney experienced in business litigation can aid you in this process.

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