Conflict is bound to arise in every business partnership. Resolving such disputes in a civil manner requires patience, diligence, and a willingness to ask for help from an experienced Houston business attorney. Print the following tips for resolving business partnership disputes and reference them when conflict arises.
Think Ahead and be Proactive
The best way to prevent a business partnership dispute is to have a written agreement (partnership agreement, shareholders’ agreement, operating agreement, buy-sell agreement) that provides the basis for operating the business. A written agreement can prevent business partnership disputes by providing the framework by which all partners agree to operate. This isn’t to say that an agreement will absolutely prevent a business partnership dispute, but it does mitigate the potential for one.
Recognize That an Attorney is Your Strongest Ally
No one knows business law better than a Houston business attorney. Whether the issue is a supposed breach of fiduciary duty, trade secret violation, fraud, or a breach of contract, an attorney’s guidance will prove invaluable.
An attorney will also provide assistance with highly complex matters such as bad-faith business partner removal. Let your lawyer surmount these business hurdles on your behalf and you’ll be liberated to focus on making money.
Organize All Relevant Documentation for Review
The specific processes for removing bad faith or volatile partners in a business hinge on nuances such as the organization’s governing documents. Be sure to provide all such relevant documents to your Texas corporate attorney for review.
In addition to the documents listed above, other relevant contracts must also be gathered and presented for attorney review. Everything from the details in joint venture agreements to written and even verbal contracts matters a great deal. There is also the potential for claims to center on partnership law or business corporation law that lack a written contract.
Be Mindful of Fiduciary Duties
The wording of the laws that govern business partnerships acknowledges partners may have a fiduciary duty to one another. If there exists a fiduciary duty between the partners, then certain legal conflicts may be centered around such breaches.
Examples of legal conflicts centered on the breach of fiduciary duty include:
- Misappropriation of partnership assets
- Self-dealing
- Undisclosed conflicts of interest
- Negligence in managing partnership affairs
- Failure to account for profits
- Manipulation of partnership books
- Excessive compensation
- Violation of partnership agreement terms
As an example, if a managing partner acts in conflict with the enterprise’s best interests, a different partner may be able to sue for monetary damages. Or, a partner’s failure to provide another partner with due care may result in a violation of fiduciary duty yet you’ll need an attorney to prove it.
In the worst-case scenario, a court order will disband the enterprise through judicial dissolution. A Houston corporate attorney can help you prevent this unfortunate outcome to keep your business operational.
Negotiation Might Be the Best Approach
If the business’ governing documents does not address the point of conflict, consider negotiating a mutually beneficial compromise. Negotiations are also effective when a partnership agreement does not exist.
If negotiations don’t lead to an outcome you both accept, consider mediation. However, there is the potential for mediation to lead to an undesirable outcome you could have avoided through litigation led by an experienced Texas corporate attorney.
The moral of the story is to keep an open mind, opting to consult with an attorney before attempting to resolve a business partnership dispute on your own. And make sure you retain an attorney to draft the governing documents of your business before conflict arises.
Learn More During a Consultation With Our Houston Business Attorney
There is the potential for a single business partnership dispute to disrupt or even end your business. Be proactive by leaning on an experienced Houston business attorney for dispute guidance. Reach out to us today to schedule a consultation.