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Five common partnership disputes

On Behalf of | Jun 8, 2020 | Commercial Litigation |

Partnerships are an excellent structure for most companies because you can establish clear roles between each partner and play off each other’s strengths.

However, some partnerships lead to growing tension and end in a problematic dispute that affects the business, the operations and the partners’ relationship.

Common reasons for disputes

There are dozens of reasons why business partners disagree. However, some of the most common causes of conflicts include:

  • Employment issues
  • Tax issues
  • Dissolution and liquidation
  • Business contract enforcement
  • Breach of contract
  • Fraud allegations
  • Dissenters’ rights
  • Mergers and acquisitions
  • Mismanagement
  • Shareholder claims

All these reasons could escalate into major conflicts that may end in the courtroom if not appropriately addressed.

Resolutions to disputes

There are ways to protect a partnership and a business throughout a dispute. First, you need to start an open dialogue about the current issue and what precisely the problems are.

Once you identify the problem and its severity, you can decide what approach works for dispute resolution. The first option is a negotiation where each side can work through the dispute and find a resolution that works for both parties.

If you need something more official, both partners could go through mediation where the partners ask a neutral third-party to decide a resolution for the problem.

Finally, you may resort to a court action where a judge rules over your disagreement. This option should be used in more problematic disputes such as fraud or mismanagement, but it depends on what action works best for your business.

Whatever option you follow, make sure you take the right steps for your business. You do not want to stay in a partnership if it works against the better interest of the company.