How To Settle Business Partner Disputes

How To Settle Business Partner Disputes

Starting a business with a partner is always a great idea.

After all, having two thinking heads means more useful business ideas. Also, it’s fulfilling to work together with an equal. These types of partnerships are common in the corporate world and you often see them among startups and fledging companies.

Unfortunately, even the best partners can sometimes have disagreements and disputes. This usually happens when things aren’t going well. The question is what previously happy business partners should do if they found themselves in a hapless cycle of repeated and supposedly unsolvable disputes? 

Fortunately, business partner differences can be settled and avoided in several ways. Here are some of them. Keep on reading to learn more. 

1 – Review The Original Agreement

If you have a formal written partnership agreement with your partner crafted with the help of a litigation lawyer, you should review it thoroughly in the event of a dispute. 

A partnership agreement is a document that outlines when and how the business partnership was established. It includes how differences can be resolved and specify the different roles and responsibilities of each partner as well. This legal document provides explicit instructions on how to handle disagreements and what to do if both parties wish to end the partnership. 

Check any procedures, terms, or clauses that may help resolve the problem. Studying the legal agreement between you two and going back to your original objectives may help resolve both parties.  

If you don’t have a legal agreement, there could be some form of correspondence or exchange like text messages, emails, and notes that you can use as evidence on how the two of you should handle any disputes. 

2 – Identify The Issues Behind The Dispute

Most of the time business partnership disputes are straightforward. It could be that you’re doing most of the work, while the other is doing just the basic tasks. In this case, both parties should try to resolve the issue by distributing the responsibilities evenly.

There are also some cases where a rift is caused by a deeper issue that can potentially lead to business litigation if left unresolved. In this instance, both partners should be honest with each other and lay out all the hidden issues that caused dissension, and try to seek a resolution for the benefit of the business. 

3 – Engage In Direct Negotiation

When conflicts arise between business partners, they should be resolved by talking to your partner directly in a private setting. It’s better if both two of you can set aside time and preferably have the meeting outside of the workplace to get rid of stressors and distractions. This should help establish a good mood for when both parties meet and talk. 

Even if you’ve been friends or have known your business partner for a long time, you should never make the issue personal. Do your best to stay open-minded and try to look at things from your partner’s perspective. 

Avoid assigning blame and don’t take allegations or accusations personally. Both of your focus should be on the solution not on the problem. Give your partner the benefit of the doubt and avoid making judgments. If your goal is to win the argument or to prove yourself right while making your partner look bad, then you’ll further complicate things and irritate one another even more. 

For your business partnership to survive, both parties should focus on what’s best for the company. Remember that both your actions and decisions will not only affect your business relationship but also the other employees and customers. 

4 – Mediation

If sitting down and talking with the business partner won’t work, then you might consider hiring a mediator to resolve any issues between both parties. A mediator is a third-party individual that helps business partners settle their disputes. With mediation, both partners will be able to reach an agreement without turning into full-blown business litigation. 

Business mediation is often one of the most effective methods of settling business partner disputes and is also way less expensive and less cumbersome than litigation. Plus, it’s a highly confidential process ensuring that both parties will be able to reach an agreement without having to air each of their grievances to the public. 

5 – Litigation

Litigation is often the last resort when both partners ultimately fail to settle their differences. This is because litigation is a legal process that’s expensive and may take a lot of time before a resolution is reached. 

Some of the instances where some disgruntled business partners result in litigation include breach of the partnership agreement, fraud, misappropriation of business assets, and failure to do their roles. 

Once a lawsuit is filed against a business partner, it’ll be up to the court to decide how the dispute will be settled. If the judge favors you, you could be rewarded with financial damages as a result of the other party’s actions. However, an experienced litigation lawyer is required to analyze your claims and take the corresponding legal action. 

6 – Be Proactive In Handling The Issue

If too much time has passed before a business dispute has been resolved, it can sometimes have a negative impact not just on the relationship between the two partners but on the business as well. Rifts between two partners that take a long time can also be harder to find a resolution.  

You must act fast and try to resolve the issue internally. Both parties should sit down and talk about each of their complaints and see if they can find solutions to their differences. The majority of business partner dispute stem from misunderstanding or confusion and these things should be patched up quickly and internally.

Final Thoughts

Having a dispute with your business partner can have a huge impact on the whole organization and even your personal life, especially if your partner is your close friend or a family member. You must set up proactive measures on how to avoid these partnership issues and resolve them as soon as possible. Disputes must be addressed and settled quickly before they can have a lasting effect on your business relationship and the bottom line of the company. 


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