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Three Ways to Avoid and Resolve Business Partnership Disputes

partnership.jpgMany Californians choose to set up their business operations as a partnership. A partnership offers many benefits for the founders. It can be an excellent way to create a sustainable, successful and profitable business. Of course, a partnership will only be able to maximize its potential if the partners are able to work together. If a serious intra-partnership dispute arises, it could potentially destroy the business. It is critical that business partners take proactive steps to prevent disputes. Further, when one does occur, business partners need to know how to protect the legal rights and financial interests of both themselves and their business.

1. Preventing Disputes

Start with a Carefully Drafted Partnership Agreement

When forming their business, partners should always have a written operating agreement. Further, this agreement should not be a standardized form contract. Instead, it should be drafted or reviewed by an experienced partnership attorney. The fact is, every business has its own unique set of needs and a good partnership agreement must be individually tailored. A list of non-exhaustive issues that should be addressed within the agreement includes:

  • Day-to-day decision-making;
  • How disputes are to be resolved;
  • Details about the financial interests and contributions of each partner;
  • Information about compensation and distributions;
  • The process by which shares of the partnership can be transferred; and
  • How the partnership can be terminated.

2. Resolving Disputes

Work Collaboratively, Focusing on the Solutions

A partnership dispute can grind even the best company to a screeching halt. In fact, a long-lasting dispute is likely to cause tremendous damage to the underlying value of the business. Ultimately, it is in the best interests of both partners to get any disputes resolved as quickly as possible. The best way to do this is to work towards a collaborative progress. By working together, and focusing on the solutions, partners can often find mutually agreeable answers.

3. Protecting Your Rights

Be Prepared to Exit the Business

Of course, not all partnership disputes can be resolved. In some case, there are simply irreconcilable differences or competing visions. When this situation arises, business partners need to do what they can do protect their remaining value and move on. This means exiting the business as quickly and seamlessly as possible. The last thing you want to deal with is a dispute dragging on and destroying the value of the business. A San Jose business dissolution attorney can help you dissolve your partnership in a way that will fully protect your rights and interests and that will be in accordance with the requirements of the California Corporations Code.

Contact Our Office Today

At Diemer, Whitman & Cardosi, LLP, our dedicated San Jose business litigation attorneys have extensive experience handling partnership disputes. If you are currently involved in a dispute with a business partner, our team is standing by, ready to help. Please reach out to us today to set up your free case review. Our firm proudly represents individuals and businesses throughout Northern California, including in Milpitas, Santa Cruz and Monterey.



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