A business partnership can be highly beneficial. Partners can share the workload as well as financial investments and legal obligations.
Nonetheless, there are occasions when business partners don’t get along. Here are some of the most common types of contractual disputes between business partners.
Disputes over money
Partnerships usually run on a profit-share basis. Profits are shared based on company performance, and this means that partners may also incur losses if the company has not done so well.
Profit sharing can cause disputes. A partner may either believe that they are entitled to a larger share or that they should not be held financially responsible for losses. Financial terms must be clearly outlined in the partnership agreement.
Disputes over roles
Business partners must be clear on roles and responsibilities. For instance, one partner may be responsible for ensuring that important deadlines are met. The other partner may be responsible for ensuring that staff training is up to date.
When these roles are not clearly defined, deadlines can be missed, and the compliance of the business compromised. Unclear roles can also leave partners feeling very frustrated. Again, the answer to this is to clearly define roles and responsibilities in the partnership agreement.
Big decisions
Generally, all business partners should be consulted before major decisions. It is best to have a clear voting structure outlined in the partnership agreement. When one partner makes a major decision on their own, this can result in lengthy disputes and potential litigation.
If you need to find out more about your rights as a business partner, it will help to seek some legal guidance.