When you start a partnership, you would not expect to get into disputes with your partners. But, business partnerships can be strained at some point. Disputes between partners can arise because of authority, finances, and other reasons. Sometimes, even the goal of your business can weaken your partnership. In some instances, the misconduct of a partner can jeopardize your business. Thankfully, a lot of partnership disputes can be headed off by drafting a partnership agreement.
A Clearwater commercial litigation attorney can draft an agreement that addresses things such as profit and loss allocation, decision-making rules, partner responsibilities and authorities, partner contribution to the partnership, dispute resolution, and partnership division during a dissolution. A strong partnership agreement can help you avoid a lot of kinds of partnership disputes. However, if you have this agreement in place, you may have to hire an attorney to resolve different issues that may arise in your partnership.
Here are instances in which this will apply to a business venture:
1. When A Partner Breached Their Fiduciary Duty
Every business partner has fiduciary duties of loyalty and good faith. They are expected not to compete with the partnership, follow the law, avoid gross negligence when conducting business, and other duties. When a fiduciary duty is breached, your lawyer can help you get an injunction or recover damages.
2. When A Partner Misused Partnership Assets
Your partner may use company assets like credit cards to pay their personal bills or use equipment or products for personal use without accounting for them. Such actions can drain your company of cash flow, reduce your profits, and make it difficult or even impossible for you to fulfill investor obligations. Partners should not treat the business as an extension to their bank account. Otherwise, you could have them expelled for wrongful conduct. A business attorney can help you understand your legal options.
3. When You Disagree On How To Run Your Business
When your business grows, partners may not agree on the business must be conducted. Disputes can include issues like how to use the resources of the business, who can make decisions, how to use business profits, the business opportunities the partnership has to take, and others. You can avoid the majority of these disputes if there is a partnership agreement in place. But, if your agreement does not govern a certain dispute, you can consult a business lawyer to help you resolve the disagreements. The lawyer might suggest negotiating a new partnership agreement or amending the existing one.
Leverage Litigation
A business partnership can be a powerful way to run a business, but it can also cause some serious situations to arise. Have a commercial litigation attorney on call can help make the best of a challenging business situation.
