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Understanding the five common conflicts among business partners

| Feb 21, 2024 | Business Litigation |

It’s common for disagreements to occur between business partners. They may dispute the company’s direction or argue over profit distribution. Such conflicts are a normal part of business relationships. However, some areas of dispute are more common than others. Understanding these disputes is crucial for partners to acknowledge and resolve them effectively.

Learning how to navigate disputes

Maintaining harmony in business relationships is essential. To do this, partners need to understand and learn how to navigate common types of disputes:

  1. Financial disputes: Partners may disagree about profit sharing, capital contributions, or expenses. To resolve such issues, they can refer to their partnership agreement to find a fair and equitable solution.
  2. Disputes over duties: Partners may have differing views on their roles and responsibilities. Clear communication and a well-defined partnership agreement can help clarify these differences.
  3. Operational disputes: These disputes arise when partners disagree on the direction of the business. Regular meetings and open dialogue can align partners on the company’s vision and goals.
  4. Unequal commitment: A partner might feel they contribute more than others. In such cases, reviewing workloads and contributions can ensure fairness.
  5. Exit strategy disputes: Disagreements can arise if a partner wants to leave the business and there are conflicts over the departure terms. A well-crafted exit clause in the partnership agreement can provide guidance.

It’s important to address these issues early on. Doing so can help partners foster an environment that promotes collaboration and success.

Working toward resolution

When partners don’t see eye to eye, clear communication, fair agreements, and regular reviews can help. But what if these efforts don’t work? Then, it might be time to think about other options like mediation or arbitration. During these processes, partners might need to review their agreement to ensure it is still equitable or discuss a buyout if one partner wishes to leave. If it benefits the company, ending the partnership could also be an option. Dealing with such matters while building a business can get stressful. In this case, consulting with a legal professional could be beneficial. They can help partners navigate state laws and regulations toward resolution.