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What Are the Most Common Causes of Partnership Disputes?

Written on March 12, 2020

Even when you run a highly successful Florida business, it’s inevitable that stakeholders will become embroiled in partnership disputes at some point during the company lifecycle. When you’re unable to resolve them, disagreements could lead to missed business opportunities, low profits, decreased job satisfaction, and many other consequences. Unfortunately, a recent article in The Balance for Small Business also reveals that partnership disputes are among the top reasons US businesses shut their doors.

As such, though you should expect to encounter disagreements, you cannot let them disrupt your business to the point of failure. You can rely on a Clearwater, FL partnership disputes attorney to implement strategies to reduce the potential, and for assistance in reaching compromise. However, you should also understand the most common causes of partnership disputes, so you’re in a better position to avoid them.

  1. Financial Rights and Responsibilities: Conflicts over each stakeholder’s duties and rights are common when a company is going through tough financial times, since they generally center on disagreements about money. One individual may accuse another of not doing enough to support the organization, or there may be disputes over liabilities and profit distribution. A solid partnership agreement can resolve many of these issues.
  1. Breach of Fiduciary Duty: All partners are obligated to act in the best interests of the company, to the exclusion of other entities and their own personal interests. When one diverts opportunities away from the business, misappropriates funds, or otherwise harms the organization, a partnership dispute may arise over breach of fiduciary duty.
  1. Insufficient Descriptions of Roles in the Company: Partners may share in the vision of success for a business, but they may not do enough to delineate who does what to achieve these goals. When there are no clearly established roles, essential tasks may not be completed – or a stakeholder will cross boundaries of another in an attempt to complete projects. No one is accountable when positions aren’t specific, leading to partnership disputes.
  1. Application of Company Resources: Partners often believe they have the company’s best interests in mind, so they’ll have strong opinions on where to allocate resources. Unfortunately, these ideas may clash, leading to intense disagreements about where to invest company funds. The best way to avoid these partnership disputes from turning into major business disruptions is to employ a mechanism for resolving differences of opinion. A partnership agreement can include provisions on allocation of company resources, such as by requiring a two-thirds vote to approve certain expenditures.

A Clearwater, FL Partnership Disputes Lawyer Can Assist with Resolving Differences

When you have a skilled attorney to advise you on internal disagreements, it may be possible to avoid costly litigation that disrupts your company and puts your interests in jeopardy. Our team at  Clearwater Business Law focuses on a range of matters affecting Pinellas County business owners, including partnership disputes. We’re experienced in working with stakeholders who can’t see eye-to-eye, but we can also employ structures to help prevent conflict. To learn more about our legal services, please call (727) 785-5100 to set up a consultation.

 

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