How To Avoid Partnership Disputes

Business partnerships can be one of the most powerful ways to ensure success in your business. Where you partner up with one or more people who excel where you are weaker, then you should have a great recipe for success.

However, whilst your skill set may fit very well, your personalities and ideas may not fit so well and this is where partnership disputes can arise and escalate quite quickly.

If you are considering entering a partnership or you are already in one, what can you do to ensure that your partnership doesn’t descend into chaos?

Partnership Agreement

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Your first step to avoiding partnership meltdown is a partnership agreement. This simple agreement can help you and your partners to understand each other, where the business is going and its goals and more importantly, what to do when things go wrong.

For example, if a partner wants to leave the partnership, there has to be some agreement about what that partnership is worth and how much of the capital and profits are attached. If this is not captured in a partnership agreement, then there is the very real chance that the partnership dissolution will descend into disagreement and dispute.

A partnership agreement identifies from the very beginning what each partner is worth so you can all avoid any disputes connected to partner’s wanting to leave the business. It is worth remembering that you do not have to have an equal partnership either. This should depend on contribution, both financially and work-wise.

Protect And Legislation

If you decide to embark on a partnership without putting an agreement in place, you can rely on an old piece of legislation called the Partnership Act 1890. This does cover dissolution, disputes and other partnership issues, but is unlikely to be that flexible or relevant to your particular business and its needs. It is far easier to invest in a good partnership agreement from the outset so that everyone is clear about the direction the business will take, the structure and perhaps more importantly, the responsibilities of everyone involved.

One thing is certain. If you want to protect your business from partnership disputes, you should, with the help of a specialist commercial law solicitor, draft a partnership agreement right from the start so that you know where you stand and your business has the purpose it needs to move forward and grow, whilst protecting everyone connected to the business from disputes getting out of hand.

If you would like to know more about the commercial law services we can offer your business, please call us on 020 7480 5861 and one of the team will be happy to talk it through with you. Alternatively you can contact us using our Online Contact Form and we’ll be in touch with you soon.