How to settle disputes between business partners?
Disputes will always arise in business partnerships, as they do in any close relationship. Yet, while working with a person or a group, it can be simple to become emotional and lose sight of the bigger picture. It is possible when there are a lot of stakes and a lot of money involved. This is why it’s so important to understand how to resolve disputes with your business partner.
Partnership Disputes
A partnership dispute may develop for the reasons listed below:
Partner under-performance
When a partnership is formed, each partner is given a particular role to play. A dispute may develop among the other partners if one partner is unable to carry out their duties.
Secret profits
Before the other partners, all profits made by the partnership must be disclosed. A dispute in the partnership may result from any partner making a secret profit without the knowledge of the other partners.
Conflicts of interest
A partnership demands that all partners share a common interest in the business. Conflict may develop if two partners share a different vision and the other partners do not agree.
Conflicts in management or personality
The best course of action in this situation might be to end the partnership completely. You might need to involve the courts to make sure that everything is wrapped up and the assets of the company are distributed fairly.
Dispute Settlement Advice for Your Business Partner
A dispute with your partner need not be bad for your company. You may take steps to keep:
- disputes under control,
- manage them so that each person feels heard, and
- come to a settlement that keeps your relationship and business secure.
Here are four strategies to use when dealing with disputes with your business partner:
Maintaining Records and Gathering Evidence
There must be a clear and thorough record of the actions that gave birth to the application if a court order for dissolution is to be requested. If the subject is challenged and needs to be decided at a hearing, witness statements will be important. But, contemporaneous evidence of the activity will also be essential. This could be minutes from partnership meetings or letters that were written at the time to address urgent problems.
It may be meaningful to seek advice to ensure that matters are properly recorded and meetings are conducted fairly and by the partnership agreement. This can later be relied upon in evidence. Only if partners are concerned that disputes may not be able to be resolved by agreement and think that court action may be necessary.
The partners’ sole responsibility after a partnership is dissolved to:
- close the partnership’s affairs
- realize its assets, and
- distribute them to the partners after all debts and other responsibilities have been paid.
If a partner or partners continue to use partnership assets after the partnership has been dissolved, the partnership may once more file claims against them.
Never Hesitate to Seek Outside Help
To settle a dispute, an unbiased third party is sometimes needed. For this reason, the entire field of mediation exists. Using a mediator could result in a more peaceful conflict, a quicker resolution, and a result that is more beneficial to all parties. Mediators are trained to resolve disputes of various kinds. If an agreement is reached, a mediator can make sure that each side is making a fair number of compromises and that nobody feels taken advantage of as they leave the negotiating table.
If hiring a professional mediator is not attractive to you, you can think about using a friend or coworker instead. The person you select should be completely impartial and skilled in handling disputes. If not, you can end up with a mediator who is more harmful than helpful.
Set Aside Time for Resolving Conflict and Problem-Solving
Set Aside Time for Resolving Conflict and Problem-Solving
In the event of a dispute, the parties involved should be ready to set enough time aside for a thorough discussion or an unbiased negotiation. It might be distracting, fruitless, and confusing to try to solve the problems while you are overwhelmed with work. It becomes simpler to arrive at a satisfying conclusion or any conclusion at all when both parties are ready to make time for a calm and reasoned discussion and keep the conversation’s attention on possible solutions rather than the issue at hand.
Create a Partnership Agreement with a Business Mediator’s Help
You might need to put an operating agreement or a partnership agreement in place, depending on the kind and type of business. To help you with this important task, it is best to seek the help of a qualified partnership mediator. Sometimes, business partners prefer to avoid the burden of having a written agreement or try to put one together themselves.
The basis for a successful and long-lasting business partnership will be laid by working with an experienced mediator to draught a complete partnership agreement. You cannot create an agreement using a pre-existing template because every business is different. You and your partners can customise the agreement to meet your specific business needs with the help of a business partnership mediation specialist.
Conclusion
Partner disputes can be resolved using a variety of techniques, including:
- Arbitration
- Mediation
- Negotiation
How a dispute can be resolved includes court proceedings and awards. Arbitration is the best method of dispute settlement out of all the available options.
