Most Common Partnership Disputes in Business
A common issue within companies is disputes erupting between business partners. Tension can arise from the stress of both working together and jointly owning the business, which can create a legal mess for all parties involved. To best avoid disputes, it is helpful to understand some of the root causes. Some of the most common partnership disputes include:
Disputes over resources: When partners can’t come to terms about how to allocate financial resources, conflict can ensue. This can lead to lengthy debate over large purchases, such as machinery, which can put business operations on standby while the partners attempt to resolve the dispute.
Failure to distribute work evenly: When people enter into a business partnership there are instances where one partner may do the physical work, while the other is simply the financial investor. In other cases, the partners agree to divide up the work evenly. When one partner feels that the other is not carrying his or her weight within the business, disputes can arise.
Breach of fiduciary duty: Business partners have a duty to act in the best interests of the company. Partners should not misappropriate company funds or do anything that would harm the partnership. When one partner violates these principles, it is known as a breach of fiduciary duty and can result in litigation, and even dissolve the partnership and business.
Failure to delineate authority: Another frequent cause of partnership disputes is when partners fail to delineate authority and both end up working on the same issues, simultaneously. By failing to separate responsibilities, conflict tends to arise as both people tend to the same problem, while other issues may get ignored.
If you are in the midst of a partnership dispute and it is effecting your business operations, contact the legal team at Branfman Mayfield Bustarde Reichenthal, LLP to speak with an attorney about your case and schedule a consultation.