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Common disagreements that arise in business partnerships

On Behalf of | Oct 30, 2020 | Business Law, Firm News

Disagreements can cause serious problems for business leaders. Businesses can suffer damage if the partners are unable to resolve their conflict. Three things that commonly lead to business disagreements include:

  • The idea. A business opportunity always begins with an idea. Whether that idea involves creation of a new tangible product, service or intellectual property, disputes can arise when one partner believes the other has stolen the original idea for their own gain. As a result, it is important to take steps to protect that idea. In some instances, copyrights and patents may be needed. In other, a contractual agreement can provide protection.
  • Finances. It is not uncommon for one partner to take the lead on finances with the other focuses on operations. The person in charge of finances may not be honest with the other partner about the business’ income or the result of negotiations that directly impact the business’ finances. This can lead to allegations of self-dealing or misappropriation.
  • Operations. Disagreement can occur over the operations of the business if the partners have equal distribution of power. It can be very difficult to resolve the issue when both have the same weight in the decision-making process.

Partners can mitigate the risk of these disputes by having clear ownership rules. Successful business owners recommend candid discussions about how much time and effort each plans to commit to the enterprise before setting a salary to reflect each partner’s contribution. Transparency is also important. Open communication about expenses, income and operations can help to reduce the risk of a dispute.

Unfortunately, even when partners take these steps, disputes can happen. It is also not uncommon for one partner to fail to abide by these rules. In either situation, options are available to resolve the issue. Legal remedies include dissolution of the partnership, removal of the partner or taking the issue to court to reach a resolution.