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How To Handle A Dispute With A Business Partner


Partnerships can fail for a multitude of reasons. Perhaps the partners did not have a strong business plan and cannot agree on how to run the business. One of the most important reasons for failure, from a legal standpoint, is that the partners failed to have a written partnership agreement in place.

Partnership agreement

Typically, a partnership agreement is drawn up by a lawyer at the beginning of the venture and details everything from each partner’s initial stake and percentage ownership to how responsibilities are divided and even how disagreements will be handled.

Without a partnership agreement that provides guidelines for business decisions and operations, partners can often find themselves at odds, putting the entire venture in danger.

Changes in the partnership agreement

If you and your partner have a partnership agreement in place, but find yourself in a situation where your partner no longer wants to participate in the venture or would like to step into a position of less responsibility, there are options.

You can change the weighting of the partnership agreement so that you now have a majority share while your partner remains involved, but to a lesser extent.

Another option is to buy out your partner altogether and assume full ownership of the business.

Dissolving the partnership

In the instance that both you and your partner no longer want to participate in the venture, and you have a partnership agreement, it may be time to examine the section of the agreement that details the dissolution plan.

The plan should give clear instructions on terminating leases, paying off loans, selling property, and distributing any remaining assets, capital, or debt to the partners.

No partnership agreement

If you do not have a partnership agreement, any changes in the management of the company, or the dissolution process, can become much more complicated. If you and your partner are parting ways amicably it may be easy to work out the terms. However, if there is ill will that caused the split, you may need to consider mediation or even pursuit of the case in court.

If you find yourself in a disagreement with your business partner, it is important to know your options and rights. For guidance on this issue, contact an attorney experienced with business litigation.