This article discusses tips for overcoming partnership disputes and for forming stronger future relationships.
Partnership disputes arise for a multitude of reasons, but the main issue is usually lack of communication.
If something happened to one of the partners and an agreement between partners was never formally made, then the partnership business may be at risk. It's impossible to know if something might happen, and that's why partners need protection.
In order to overcome partnership disputes and to establish better working professional relationships it's imperative to focus on the following:
Draft a written partnership agreement.
It usually feels overly formal and uncomfortable, but many aspects of business also do. Creating written agreements should be a priority. You may feel more comfortable creating verbal agreements, but they will not hold up legally as well as written contracts.
What terms and conditions need to be defined in your partnership agreement?
- What is the nature of the commercial enterprise
- Type, purpose, and length of partnership
- The roles, responsibilities, and contributions of each partner
- What are the management powers and or duties
- How future contributions are processed
- The procedures for partners leaving and new partners joining
- Process for partner expulsion
- What is each partner's salary
- How are the profits distributed
- How are trade secrets regulated
- Who will control the finances and how they will be controlled
- Partnership dissolution process
- Fraud deterrents
- Mediation and arbitration clauses for disputes
- Amendment process
Each partner should obtain their own separate legal counsel.
Each partner's legal counsel should review the partnership agreement to see if their client's best interests are met and if not, how can the agreement be revised to better meet those interests.