Steps to Take to Prevent Partnership Disputes
February 12, 2024

Setting up a business partnership or being made a partner at an already-existing company can be daunting yet exciting. With two or more heads contributing to ideas, management, finances and other general business decisions, it is not uncommon for disputes to arise among partners. 

Where possible, partners should do all they can to take steps to prevent disputes from arising. After all, a partnership dispute can lead to costly, disruptive and time-consuming consequences that can be detrimental to a business.

In this article, Bowsers Solicitors experienced commercial dispute solicitors share some insight into some steps that you might consider as a partner in a business to mitigate the risk of disputes arising where possible.

Implement a Written Agreement

Partnership agreements are vital to ensuring that all parties within a company are protected. Your partnership agreement should cover a range of aspects, including:

  • How much percentage control each partner has.
  • What obligations and duties each partner has.
  • How much capital is immediately contributed by each partner.
  • What will happen to any additional capital contributions.
  • How profit will be distributed.
  • How decisions will be made and how deadlocks are broken.
  • How ‘worst-case scenario’ situations would be dealt with.
  • Which circumstances may lead to the termination of the partnership.

Some other elements may be included where appropriate, but this will depend on the nature of the partnership, how many partners there are, and the industry the business is in.

Communicate Openly

Communication is vital in any business where there are multiple stakeholders and shareholders. This remains in partnerships. Where possible, partners should seek to speak frequently about potential points of dispute before any issues escalate.

With this, where reasonable efforts are being made to fix any issues, it is sensible to revisit written agreements to identify how disputes should be addressed.

Where an issue does not have provisions for addressing it in a partnership agreement, it may be sensible to update the agreement to prevent such issues from arising in the future.

Instruct the Support of an Impartial Third Party

Where an issue has arisen between partners, you may consider instructing the assistance of an impartial third party to act as a mediator. Mediation can assist in clarifying misunderstandings, determining underlying concerns, finding areas of mutual agreement and incorporating these aspects into proactive solutions.

Even if mediation is unsuccessful, it is likely that the partners will be more informed about the other’s perspective despite requiring legal intervention.

Partnership Dispute Solicitors

Based in Cambridgeshire but supporting clients across the UK, Bowsers’ experienced commercial dispute solicitors have the knowledge to assist you should you find yourself amid a partnership agreement.

We will assist you in understanding your rights and obligations, helping you move towards a resolution whilst presenting all of your options carefully to you and keeping you updated on the status of your case.

To speak to a member of our team today, please call 01945 583194 (Wisbech), 01354 652606 (March), email reception@bowsers.co.uk or fill in this contact form.