How are partnership disputes resolved?

Starting or acquiring a business with a trusted partner can be an exciting endeavor for a San Diego resident. Especially when the partners see eye to eye and agree on most matters related to the management and running of the business, business ownership can be enjoyable. However, not all partners see their entities the same way, and from time-to-time serious disputes may arise between co-owners or partners.

When a partnership dispute arises, there are different ways that it can be resolved. Often the founding documents of the entity will describe the possible ways the partners can seek answers to their differences. The remainder of this post will discuss some options partners may have to settle their differences, but not all of the options may be available to all business owners.

Alternative dispute resolution

Many partner disputes are handled in alternative dispute resolution like mediation. Partners work with a third-party neutral to discuss their differences and possible options for resolution. Sometimes mediation is successful, and sometimes it is not. It depends on the individuals and their ability to find common ground.

Sales or buy-outs

For some partners, it is impossible for either to stay in the business if there is no possibility of them finding a way to work together. In such scenarios they may choose to sell their interests to outside parties. Both may leave the entity and surrender their partner duties to it. In other cases, one or more partner may choose to buy out another to manage differences.

Dissolution

If all partners want to leave a business and no one wants to buy it, the partners may choose to end or dissolve their entity. There is a legal process of dissolution that a business law attorney can help with.

Litigation

Finally, some business disputes between partners may go to court. In court, the partners may have a judge decide the way they will move forward. Litigation can be the only way for some partnerships to find resolution.

Business law disputes can be tricky between partners. There are options for resolution. Legal support can help partners with questions about these issues.