Business partnership disputes can be very serious and may result in litigation. Two business partners could have such a serious dispute that they have to dissolve the company, or that one of them leaves the business altogether.
One way to work to prevent this is by using a partnership agreement. When the business starts, the two partners essentially draft a contract that will govern how they work together. It’s more than just a handshake deal and a verbal agreement to put the company first. They spell out many of the specific terms and details that could lead to a dispute.
Financial issues
For example, the company is going to make money at some point. How are the partners supposed to divide these earnings? Do they just split up the total value of the money that the company brings in between the two of them? Do they take a set salary per year and let the rest of the money stay with the company? Are they earning an hourly wage, even though they own the company, just like any other employees?
There are many potential ways to address payment. But conflicts and disputes can sometimes arise when there are mismatched expectations or assumptions. There can also be conflict if one person thinks the other partner is acting unfairly, such as if that person is taking the majority of the business’s earnings when they don’t have a right to do so. Addressing some of these things upfront can help keep a dispute from happening.
Unfortunately, though, disputes are still possible, even with a partnership agreement in place. If you find yourself in this position, be sure you know what legal options you have.