Disputes between business partners are not uncommon. Fortunately, many partners manage to resolve them.
However, it’s better to prevent conflicts. Here are few things that can help.
Have a written partnership agreement
A partnership agreement doesn’t have to be in writing to be effective. An oral contract can be enough to get two people in business. But if you want to prevent future disputes, it’s crucial to have a written partnership agreement.
Your agreement should outline the purpose of the partnership, the duties of each partner, ownership interest, decision-making processes, the distribution of profits and losses and more. It should provide adequate information regarding the partnership. Since it’s written, you can always refer to it if there’s any question about what you agreed on, which can be common with oral agreements.
Agree on an exit strategy
Some disputes arise between partners during exit. Therefore, you and your partner should agree on when one can voluntarily or involuntarily leave the business. This information should be included in your partnership agreement.
You should also agree on what will happen if one of you dies. Will the deceased’s estate take over their share of the partnership? Can the remaining partner buy the shares from the deceased’s heirs? Will the partnership come to an end right away after the death? Doing this can prevent disputes between the remaining partner and the deceased’s family.
It’s beneficial when business partners develop a personal relationship. However, whether you went into business with your friend or developed a friendship along the way, you should remain professional when handling business issues. Being overfamiliar can cause disputes between business partners.
Whether you need to draw up a partnership agreement or have a serious dispute with your partner, you can benefit by having experienced legal guidance.