There will Always be Disputes in a Partnership
First of all, let me just say that like marriage, even the best partnership will periodically encounter problems and just like a marriage conflicts and disputes should not be left unsettled. Whether a million dollar enterprise or back-alley bar, disagreements over management of your partnership will occur.
Measures to Prevent those from becoming Permanent Problems
Disagreements about money or management should be handled promptly, face-to-face, not left to fester. To most this would seem obvious; however, in cases where one partner is more outspoken or aggressive than the other, the other may be hesitant to discuss issues with the outspoken partner. Additionally, just like a prenuptial agreement, some things, by human error or oversight are left out of the original agreement. Some points that may have been overlooked could be: What happens when a partner is no longer capable of handling the business, due to disability, diminished mental capacity, or death; The other partner no longer want to work with the overbearing, outspoken partner; or the aggressive partner seeks to relocate to Aruba.
Should you need legal counsel, we recommend visiting attorney’s website for information.
Of course, it goes without saying that you should have sought out a business attorney to draw up the plans for the partnership, but that ship has sailed and now you are left to deal with the plan you have in place. Not all disputes can be foreseen or easily resolved. Things change periodically and so should your partnership agreement. To save problems, you should agree to take out your business plan at least annually and apply the lessons learned about your partnership to your business plan or agreement. Except this time, utilize a competent business attorney and avoid further conflict. While you’re discussing the update, in the presence of an attorney, is a good time to bring up possible changes you were hesitant to discuss previously.
Ask a Colleague to Mediate or if necessary, Hire an Independent Arbitrator
Even when the partnership agreement is expertly crafted, one partner or the other may misuse business assets, become too overbearing, or unavoidable disagreements may occur. A downturn in profits could very well lead to disagreements regarding ways to increase sales or services. And, there is always the possibility of one partner performing dishonest deeds.
In a lot of these cases it may become necessary to ask a colleague to mediate the situation to resolve the conflict, or you may need to hire an experienced arbitrator. Ask a business attorney to include a clause for mediation or arbitration in your partnership plan during periodic reviews, if one is not present. An arbitrator or even a panel of arbitrators can settle conflicts and avoid a trial that might end your partnership, if both parties are intent on salvaging the partnership arrangement.
How to Dissolve a Partnership when you can no Longer Work Together
However, there may come a time or an incident that makes resolution impossible. When both partners agree that it is no longer feasible to continue the partnership for whatever reason, they may agree to dissolve the partnership voluntarily. Let’s say that one partner wants to move to Aruba and no longer wants to be a part of the business. In that case, both parties will have to agree on how debts will be paid and current assets divided. If the other partner wants to continue the business, he or she may decide to buy out the other. A voluntary dissolution does not have to involve an attorney, but you would be well-advised to include a business attorney from the onset to ensure both parties are amicable about the arrangement to avoid further conflict.
When partners reach an impasse on how to end their business relationship, it may become an involuntary dissolution. An involuntary dissolution might be accomplished by an arbitrator or a panel, or if necessary a court may appoint a separate, nonpartisan attorney, legal advocate, or panel to divide the assets and liabilities after a proper inventory has been completed. A judge may order a freeze on the assets of the business, if one partner is accused of inappropriate business practices or theft.
Be sure to visit our law firm to obtain legal advice from a recommended attorney.
Do not Rely on Luck to Guide Your Partnership
Don’t leave important issues to chance, give me a call and let me assist you put a rock-solid business plan in place before you initiate your plan for a partnership. I have the knowledge and experience from years of business practice to provide you with the legal services you need. Give me a call right now and setup an appointment to review your business plan or draw up a new one.
