How to Avoid Pitfalls and Resolve Conflict

Partnership disputes, shareholder disputes and conflict between business partners are unfortunately common. When several different parties are involved in a business, it’s possible that disputes will arise from time to time. If you have the right systems in place to resolve these disputes, however, you can avoid legal pitfalls and escalations in conflict.


Partnership Dispute Resolution via a Formal Document

A formal legal agreement with the other party, such as a partnership agreement or shareholders agreement, can offer a quick route to partnership dispute resolution. That’s why it’s always a good idea to create a formal legal agreement when you establish the business.

Review the legal agreement document carefully if a dispute arises. Make a particular note of your existing resolution procedures for partnership or shareholder disputes and terms or clauses that deal with the issue at hand. Relying on the original formal agreement and your original intentions on an issue may help to reach a resolution.


If There’s No Partnership Dispute Resolution Procedure

If you do not have a formal written agreement, there may be other evidence of the informal agreement of your partnership or business relationship when it began. This evidence may include:

  • Emails
  • Notes
  • Text messages
  • Any other form of written correspondence

Look through all of these to find if there’s a record of how all parties intended to handle any disputes.


Identify Issues and Potential Outcomes

Aim to identify the real issues at hand. Consider whether the dispute relates to a misunderstanding with your business partner. For example:

  • Different expectations about division of responsibilities
  • Unequal division of work
  • Different visions and priorities for the business
  • Incompatible management styles
  • Discrepancies in financial investment and profit-sharing

Consider a fair and realistic outcome to the dispute. If your business partner has different priorities and expectations in an area about which you are arguing, dispute resolution is more unlikely.


Communicate Concerns with Your Business Partner

Once you have identified the key issues in the dispute, set up a meeting with your business partner to discuss the problems. Check you are on the same page about the bigger picture for the business. Keep a written record of the items discussed, any additional issues raised or outcomes proposed.

If you cannot resolve the dispute through a meeting, consider writing a formal letter to your business partner that thoughtfully sets out the issues and your suggestions for a potential resolution. Set a deadline for a response and the following steps if you cannot reach an agreement.


Seek Assistance from a Commercial Lawyer

A neutral third party can help business partners resolve disputes. Commercial lawyers are trained to mediate and deal with a range of business-related disputes and conflicts. A lawyer can also explain your rights and obligations in the dispute and help avoid the matter going to court. If Court is necessary, they can also assist with the commercial litigation process.


Experienced Commercial Lawyers in Melbourne

For assistance mediating business disputes, contact the team at McNab McNab & Starke. Our team of business lawyers can offer tailored advice and help you find an appropriate resolution:

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Contact the team today on 03 9670 9691 or use our online contact form.