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What are common causes of partnership disputes?

On Behalf of | Feb 15, 2023 | Business Law & Litigation

Entering into a business partnership in California can be a good business option for the people involved. It gives the partners complete control over the decisions and direction of the company. It can also allow the partners to use their unique skills and talents to compliment the talents and skills of the other partners to produce a well-rounded company capable of meeting all of their clients’ and customers’ needs.

Partnerships also require a lot of communication and decision making between the partners. There needs to be trust between them that each partner will and is performing their job responsibilities. From time to time, partners will have partnership disputes. There can be many different reasons for partner disputes, but some are more common than others.

Common reasons for partnership disputes

Some of the more common reasons for partnership disputes are:

  • The partners lose trust in each other
  • The company goes through financial or growth struggles
  • Partners start to have different priorities
  • There is financial inequality or investment inequality
  • Different work habits or personal habits that bother the other partner
  • A power imbalance between partners
  • Different values and vision for the direction of the company

Disputes are bound to arise in a partnership and the partners will need to address them properly. If they are able to address them quickly and properly the partnership will most likely succeed. However, if the opposite is true, then there is a chance that the partnership will dissolve.

One way that partnerships can work through these disputes effectively actually starts before the dispute arises. Well-written partnership agreements can set the expectations for each partner and also provide a road map for how they will resolve disputes when they arise.

Partnership disputes will occur in Northern California. How the partners resolve them will determine what happens to the partnership. Having a well-written partnership agreement will help, but sometimes, partners will not be able to resolve their disputes on their own. Experienced attorneys understand how to resolve partnership disputes and consulting with one could be beneficial.