How Do You Settle Disputes Between Business Partners?

The relationship between business partners is unique from other types of relationships. One person is not necessarily the “boss,” so major decisions need to be made collaboratively. Additionally, while you probably get along well with your business partner, it is still a business relationship. You won’t agree with each other all the time, and sometimes those tensions will escalate beyond just a disagreement.

So, what should you do if you and your business partner become so at odds with each other that it results in a major dispute – one that could potentially leave the future of your business in the balance? Here are some suggestions:

Plan for Conflict With Business Partners

While it’s tempting to wear rose-colored glasses when you’re forming your business partnership, it’s important to be a realist, too. Things will not always go as planned, so plan for the unexpected. 

Create a detailed partnership agreement when you begin your business relationship (or as soon as possible thereafter). In your partnership (or shareholder’s) agreement, you should discuss important issues like who will be responsible for what in the business, how much control each partner will have, how decisions will be made, how much capital each partner is expected to contribute, and – when you have a dispute – how will it be resolved? 

Try to Resolve the Dispute Between Business Partners Internally First

If you have a partnership agreement in place, that should be the first thing you consult when a conflict arises. How did you and your business partner determine conflicts would be handled?

Then, you should try to do everything you can to resolve the issue between each other before escalating the issue. This could save you a lot of time and legal fees. It could also save your business. 

As you and your business partner discuss the issue at stake, try to see the other person’s point of view and understand where they are coming from. It can be tempting to make rash judgments in the heat of the moment but give the other person the benefit of the doubt. It can also be helpful to give each other a cooling-off period to step back from the situation and reset.

In a Protracted Dispute Between Business Partners, Consider Mediation

If you can’t resolve the dispute internally, you may want to turn to mediation. Mediators are trained professionals who can help you and your business partner resolve your dispute or negotiate a settlement out of court. The cost of mediation is also much less than litigation, and it is a confidential process. Many partnership agreements stipulate that partners must first attempt mediation before taking any legal action.

If you have questions about mediation or the best ways to resolve a business dispute, please get in touch with our commercial law team at Silverberg|Brito, PLLC. We can help you and your business partner resolve your grievances and come to a solution that everyone can agree on.

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