A common risk of business partnerships is that they may deteriorate and become adversarial. When this happens, the business relationship isn’t the only thing that is at risk. In addition to the deterioration of the partnership itself, business partnership disputes often result in significant financial losses, tarnished reputations, and bad feelings all around. Therefore, as a business, it’s imperative to implement strategies on the front end to lower the risk that disputes will occur. However, when avoidance isn’t possible, businesses must understand how to address disputes in a productive and efficient manner. In this article, we examine some strategies for avoiding and settling common business partnership disputes.
Avoiding Business Partnership Disputes
As noted above, avoid partnership disputes provides value. Therefore, all businesses should consider taking proactive steps to avoid business partnership disputes. One common method to avoid business partnership disputes is to adopt a written partnership agreement. By memorialize the key facets of your business partnership, business partnership agreements allow parties to anticipate and avoid the most common disputes before they happen. Business partnership agreements commonly memorialize how the following (and certain other) events will be resolved:
- The partners’ roles and responsibilities
- Capital contributions
- Profit division
- Partner death and incapacity
Settling Business Partnership Disputes
Unfortunately, partnership agreements can’t prevent all disputes. When a dispute does arise, businesses can employ the following settlement strategies:
- Negotiation: When a business partnership dispute arises, the parties to the agreement should address the issue directly via negotiation. Negotiating with a business partner is often all that is necessary to resolve a partnership dispute. Negotiations may either be formal or informal. For minor disputes, informal negotiations may be adequate. However, when serious issues arise, formal negotiations are often necessary.
- Mediation: If negotiations fail, business partners may want to hire a mediator to help resolve their dispute. A mediator is an independent third party that helps the parties to a dispute reach a resolution. Through mediation, parties attempt to reach an agreement without resorting to litigation.
- Litigation: When all else fails, business partners can go to court to settle their dispute. When a business partner files a lawsuit against another partner, the court will ultimately decide the outcome of the dispute. Litigation is usually a last resort, as it is the most uncertain and expensive of all the methods available to business partners to resolve their disputes.
New York and Long Island Business Disputes Attorney
If you are involved in a business dispute in New York or Long Island, you need an experienced business dispute attorney on your side. Regardless of whether your business partnership is governed by a written agreement or an oral contract, our knowledgeable New York and Long Island business dispute attorney can provide you with the legal guidance necessary to resolve your dispute. Whether you need to defend a claim or want to initiate a claim, please contact us today to schedule an initial consultation.