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3 Most Common Causes of Partnership Disputes

3 Most Common Causes of Partnership Disputes

Even the most successful businesses run into bumps along road. One problem that is common for business owners to face is partnership disputes with other founders or co-owners of the company. When these types of disputes go unaddressed it can result in low morale throughout the company, lost profits, and in the worst situations, dissolution of the business. By crafting a thorough and clear partnership agreement, these disputes can be avoided. To better understand what items to include in your agreement, we have complied this list of the most common factors that contribute to a partnership dispute.

  1. Poorly defined authority: A partnership agreement provides co-founders the opportunity to clearly define each party’s role and authority within the company. If these roles are not defined from the start, it can result in important tasks failing to get done, people stepping on each other’s toes trying to do the same tasks, and leaving gaps for who should be held accountable for different areas of the business.
  2. Misuse of business assets: If one person is using business assets for his/her own benefit such as paying personal expenses or funding lavish trips, it can result in a major discord between partners. This kind of selfish spending puts the company into financial strain leading to complicated partnership disputes.
  3. Breach of fiduciary duty: When partners form a business together, there is an understanding that each partner has a duty to act in the best interest of the company. This is known as fiduciary duty. When a partner chooses to misuse company funds, divert company opportunities to him/herself, or intentionally does harm to the business or other partners, he/she is breaching fiduciary duty.

Are you in the midst of a dispute with your business partner? Christopher E. Seymour, Attorney at Law is here to provide you with quality legal counsel and representation. Reach out to his office today to request your free consultation.