What You Need to Know About Business Partnership Disputes

Running a business with a partner is all well and good until disputes begin to occur. There is a high chance of this happening the more your business expands and you begin to collaborate with more people. Disputes are a natural occurrence between partners in many businesses, but if it’s not handled correctly or avoided in the first place, they might fester into something unmanageable and downright unpleasant. The first thing that you should keep in mind is that like all relationships, partnerships are bound to suffer from conflicts and that’s why you need to be aware of the nature of these conflicts in order to deal with them in the future. In the following guide, we provide you with a couple of pointers on how to prevent and deal with partnership disputes.Business Partnership Disputes

Prepare a Plan Beforehand

You probably are already aware that there are some topics or aspects of your business that might encourage conflicts in the future. For example, your partner may feel dissatisfied with how much work they are doing compared to your responsibilities and work. In that case, you can prevent a dispute from occurring by understanding your partner’s concerns. You can do this by showing your partner their responsibilities and laying out how responsibilities are divided between you two in advance, especially if you’re heading into the next business venture or the holiday season. By doing this you’ll be able to discuss the division of responsibilities before actually having to deal with the work. 

A Written Agreement

One of the best methods to pinpoint both of your and your partner’s responsibility is by writing down an agreement, which details your responsibilities, how much control both of you have, and your role in that business. The commercial litigation and debt recovery specialist solicitors also recommend doing this step in advance to avoid any litigation and costs involved. So, make sure that the written agreement (an operating agreement or a partnership agreement) that explains who has control over what and how much, partners’ roles in the business, capital contributions, partners’ duties, worse-case scenarios, ownership percentage, and the procedures that will be followed for decision-making. It should also detail how a partner can withdraw from business and when he can do so. An agreement will also be of great help in the future. Should any dispute arise, you can go back to the agreement read over any dispute resolution procedures related to the issue at hand.Business disputes

Make Time for Discussion

If a dispute arises anyway, despite the precautions and measures taken both by you and your partner, you’ll have to allocate a good amount of your time to discuss things over. You don’t want to have a discussion or an argument right in the middle of a workday. You can have a calm and reasonable conversation over dinner or in a meeting. While this may not have immediate results, communication, and understanding of your partner’s point of view will impact on the situation and will certainly make your conflict more manageable. Remember that you have a long-term relationship with your partner, so you need to hold a conversation with him in which you can discuss things in a calm and amicable atmosphere; therefore, casting the blame on one another or irritating your partner won’t really solve anything. 

Ask for an Outside Help

There are disputes in which you really can’t reach an agreement with your partner, in these cases, you will have to ask for help from a professional, such as a mediator to help you find a solution. Hiring a mediator is not admitting defeat, but it is a necessary measure to prevent further worsening the situation. Operating agreements also point out that if there is any dispute regarding a specific issue, a mediator should be hired to aid in solving these problems. Furthermore, a mediator should help partners with these steps.

  • Present the opinions of both partners in a neutral, non-hostile environment, which will help in creating a more productive outcome.
  • A neutral environment means that your mediator will work on eliminating emotions from discussing the issues between partners.
  • Reaching a solution, whether it is settling the dispute between partners or advising them to go their separate ways. Mediators with years’ worth of expertise will have dealt with many partnership disputes and will be able to recommend the right course of action by evaluating all aspects of your dispute.

Partnership disputes can affect both your work and your personal life. In order to avoid this negative situation from affecting you in the future, make sure to take all proactive measures to avoid creating disputes in the future. Also, be mindful of your partner’s wishes and point of view at all times to ensure that you’re both on the same page. Doing this will enable you to preserve your relationship with your partner.