The ideal of partnering is to maintain a relationship convenient for the parties involved. And even if it is not the goal, controversies can happen, and the relationship is fractured.
Partnership disputes can arise for many reasons as several partners own a business together and work together. Some of the most common causes of partnership disputes are:
A failure to fairly distribute workloads
In some cases, only some of the partners work, and others provide the funds and are considered silent partner who made only financial investment. Sometimes, partners will divide up work that needs to be done and will be involved in operating the business. If any of the partners believe that the workload is not being distributed fairly when they are operating a business together, this can result in conflict arising.
How resources should be used
Often, there is conflict regarding whether financial resources should be used for a specific purpose such as buying new equipment. Hopefully, a partnership agreement details who will have authority over the decision or which process should be used to make the decision. However, if authority is not clearly delegated and partners must decide together, it could be difficult to resolve the conflict when they hold opposing positions on the issue of resource allocation.
A breach of fiduciary duty
Technically, partners must act in the best interests of the business. They shouldn’t misappropriate company funds, they shouldn’t take a business that ought to belong to the company to benefit them personally, and they wouldn’t otherwise do anything that would harm the interests of the partnership. If a partner acts inappropriately and hurts the business, this is a serious dispute that can sometimes result in litigation and that could sometimes set the stage for the end of the partnership.
A failure to delineate authority
If there is no clear separation of responsibility among the partners, the conflict will inevitably arise frequently as both partners try to work on overlapping issues. Using partnership and employment agreements, all partners should make certain to understand both their rights and their obligations within company operations.
These and many more causes can be analyzed at Gomez Law, where you will find the best advice to resolve disputes.