Handling a business is a complicated task. There are many different components and responsibilities. Maintaining a company where a partnership exists is even more difficult as both the parties need to be satisfied and fulfill their obligations towards the organization.
Disagreements among humans are not a rare scenario and can happen in business partnerships as well, and it is essential to stay prepared for this day no matter how close you and your partner are. If you and your business partner are facing differences or if you think you have reached an impasse in your relationship, a Tampa Bay commercial litigation attorney may be able to resolve these issues for you. Click here to connect with them.
3 Common Disputes That Happen In A Business Partnership
1. Financial Disagreements
Financial disputes are among the most common ones. Financial disputes involve disagreements about how partners should handle the finances and revenue of a business. It may include disputes over where the money should be invested. Often, partners have different opinions about how they should use the funds to benefit the company.
For example, one partner may prefer investing the business money in the marketing of their company and increasing exposure. At the same time, the other may want to invest in introducing a new product on the market.
Most financial disputes occur when a business is undergoing financial stress, and it is time to take liability and share profits. If there is no written agreement on how profits should be distributed among the partners, it may lead to unequal profit distribution, which will eventually cause conflicts.
2. Authority To Make Decisions
It is human nature to want to have access to authority. Authority disputes occur when one partner tries to exercise more control over the company or business by making crucial decisions that cause the other partners to feel rejected, devalued, and disrespected. If there are no written rules about which partner can authorize which section of the company, one partner may overstep their boundaries and cause conflicts.
3. Breach Of Trust
This kind of dispute is the most problematic one as it involves breaking trust. In a partnership, business partners are supposed to work in favor of each other’s interests. If any of the partners fail to do so or try to cause harm to another, they are committing a breach of trust. This type of dispute may involve mismanaging company funds, fraud, theft, not conveying important information to the partners or other illegal activities.
Breach of trust usually breaks up a partnership and leads to the dissolution of their agreement.
5 Tips on How To Get Help In Partnership Disputes
An effective way to avoid business disputes is to create a written partnership contract at the beginning. However, some conflicts may require legal help. Business attorneys can help with reviewing your old agreements and drafting a new one that works for you and your company’s best interest.
1. Understand What the Complaint is About
After you get the suit papers, take your time reviewing them with your business attorney. Start collecting evidence, monitoring your records, and gathering data to build a strong case and fight the suit. Ensure you fully understand the cause brought against you. This is a battle you cannot win without an attorney.
2. Avoid Communication with the Other Party
Your attorney may tell you not to speak with the party who brought the lawsuit upon you without their presence. Keep in mind that whatever you may say during your conversation can be used against you later. If you wish to protect your interest and increase your chances of winning your case, allow your lawyer to handle all communications with the plaintiff.
3. Notify Your Insurer
Often, you may pay less for litigation if you have insurance. You have probably purchased business insurance policies to help cover lawsuit claims such as personal injury claims, employee claims, third-party claims, and others.
4. Get Advice from Your Attorney on How to Respond to the Complaint
Once you receive the formal complaint, you usually have 30 days to respond to it. You need to provide a written response which you will send to the plaintiff and their lawyer. Your response should spell out whether or not you accept or reject the points outlined. Also, it includes your counter-arguments and defenses.
5. Work with Your Attorney Each Step of the Way
When you face business litigation or lawsuit, you need an attorney with experience in this kind of lawsuit. Business cases are not made equal and yours may require a different approach. For instance, if the complaint is about a defective product, you want to hire a lawyer with a history of winning cases like these before. The most important is that you start getting legal representation once you respond to the complaint. Without sufficient knowledge of business law, it is easy for you to make mistakes at some point. But, if you have an attorney handling your case, you can be confident that each step is taken with the utmost care and precision, ensuring you get a positive outcome from your litigation.
Types Of Breach Of Contract
- Material Breach – A material breach takes place when one party receives different results from what was promised or what was mentioned in the contract.
- Minor Breach – In minor breaches, the contract is completed and delivered from one party to another, but the delivering party has failed to meet some part of the obligation.
- Anticipatory Breach – In the anticipatory breach, one of the parties anticipates that the other party will not fulfill their obligations of the contract, even though the breach has not occurred yet.
- Actual Breach – An actual breach occurs when a party has refused to fulfill its obligations in due time or has delivered poor results.
Types Of Remedies
When one party fails to follow the contract or breaches it, the non-breaching party can cancel the agreement. The aggrieved party can legally cancel the contract and file for the damages. For example, if one party promises the other to make half of the payment by a specific date and the other party fails to do so, the aggrieved party can cancel the contract.
This type of legal remedy is used when monetary compensation is not enough to relieve the troubles of the other party. If the breaching of a contract puts the injured party in a position where they cannot get better with the help of money, then the court orders the breaching party to fulfill their contractual obligations.