People who come together to start a business usually realize that their different strengths can combine in a way that can benefit their shared venture. Yet, despite everyone’s best intentions, there are times when disputes may arise.
It’s sometimes possible to prevent partnership disputes, but it’s always a good idea to know how to handle them in the event that they occur. In some cases, a company’s fate may depend on how a dispute is handled.
Prevention of partnership disputes
A solid partnership agreement is one of the best ways that you can prevent partnership disputes. This should include all the terms that will govern the business. Some important points that should be included in the agreement include:
- Decision-making responsibilities
- Profit division
- Debt distribution
- Conflict resolution methods
- Conditions for termination of the partnership
- Partner limitations
- Contributions and ownership interests of each partner
Other issues might need to be addressed in the agreement. Because of this, it’s best to work with a legal representative who’s familiar with these situations so they offer guidance about what to include for the specific circumstances.
Handling partnership disputes
If a partnership dispute occurs, it must be handled thoughtfully. Because any contention between owners can lead to uncertainty among employees and clients, it’s best to discuss these matters away from the business. This helps to keep the stability with employees and in front of the customers.
Partnership disputes should be handled based on what’s in the company’s best interests. This means all partners should focus on logical solutions to the problem. If one partner has more experience in the area of the dispute, they should be given a chance to formulate a solution and explain why it’s the best option. The other partners should keep an open mind about it.
There are some instances in which a partnership dispute can’t be handled internally. Mediation, arbitration or litigation might become necessary in those cases. Legal assistance can provide interested parties with options so that they can make informed decisions designed to safeguard their interests.