Your Legal Options in a Business Partnership Dispute
Business partnership disputes can arise at any time for different reasons. If these disputes are not handled effectively, they can threaten the stability of the business. Understanding your legal options is crucial if you are involved in a partnership dispute.
Common Causes of Partnership Disputes
Understanding the common causes of partnership disputes can enable you to anticipate potential issues and take preventive measures. The following are some of the common causes of partnership disputes;
- Financial disagreements, such as disagreements over financial contributions, profit allocation, and business losses.
- Disputes over roles and responsibilities.
- Breach of fiduciary duties
- Disagreement over business direction or operations
- Violation of the partnership agreement
- Communication breakdowns
Legal Options During a Partnership Dispute
When you are facing a business partnership dispute, there are several options for resolving the issue, including the following;
- Reviewing the Partnership Agreement
When faced with a business partnership dispute, your first step should be reviewing your partnership agreement, if you have one. A well-drafted agreement will typically include provisions for dispute resolution. If the agreement includes a provision for dispute resolution, you may need to follow those terms.
If business partners don’t have a formal agreement in Tennessee, the laws under the Tennessee Revised Uniform Act will apply by default.
- Communication and Negotiation
Before taking formal legal action, business partners should try resolving their disputes through open communication and negotiation. If partners can engage in honest dialogue, resolving the matter without going to court may be possible. Partners can express their concerns through negotiations and work toward a mutually agreeable solution.
Note: Partners should put any agreement they reach into writing. This can help prevent future misunderstandings.
- Mediation
If emotions are high or there is a communication breakdown, it may be necessary to work with a neutral third party such as a mediator. A mediator helps partners communicate and reach a mutually acceptable resolution. This form of alternative dispute resolution (ADR) allows parties to express their concerns while working toward a compromise under professional guidance. This option allows parties to maintain control over the outcome since mediators do not make decisions.
- Arbitration
If negotiation or mediation fails, arbitration, another form of ADR, may be the next step, especially if it is included in the partnership agreement. Arbitration involves working with a neutral arbitrator who listens to both sides of the story and issues a decision. This option can be faster and less formal than litigation.
- Litigation
If all the above options don’t work or if the dispute involves serious allegations like fraud or breach of fiduciary duty, it may be necessary to go to court. Depending on the circumstances, the court may order remedies such as restitution, specific performance, or even termination of the partnership.
- Dissolving of the Partnership
Sometimes, it is not feasible to continue the partnership. In such cases, one partner can file for dissolution. Dissolution involves terminating the legal relationship between the partners. It involves notifying stakeholders, settling debts and obligations, and distributing assets.
Contact Our Knoxville
If you are involved in a partnership dispute, contact our Knoxville business & commercial litigation attorney at Reynolds, Atkins, Brezina & Stewart, PLLC. for legal help.
Source:
bwp.tnble.org/wp-content/uploads/2019/09/Business-Associations.pdf
