When you own a business that is structured as a partnership, it is important to have a well-crafted partnership agreement in place that provides as many details as possible to avoid a partnership dispute between or among partners. Yet there are more ways of avoiding partnership agreements and eventual litigation than ensuring that you have a clear partnership agreement for operating your business. There are specific details that should go into the development of your partnership agreement to avoid disputes, and there are also other considerations to take into account as you build your business in a way that allows you, as much as possible, to avoid a partnership dispute that can cost time and money, and that ultimately might be able to derail your business plans.
Recognize That the Best Way to Prevent a Partnership Dispute is to Plan Ahead
Partnership disputes can arise for a wide variety of reasons, but many of them are foreseeable in the early days of forming the business. As such, the first step in preventing a partnership dispute is to recognize that there is a critical need to plan ahead—before the business paperwork gets filed—for potential disputes that may arise. As an article in Forbes underscores, “the best way to avoid a partnership dispute is to begin preventing one from the outset of your business relationship” since “a partnership dispute can like a time bomb—if you can learn to hear the ticking, you might not be caught by surprise in the detonation.”
Yet the key thing to remember, according to the Forbes article, is that “disputes often originate from poor planning,” or “a failure to proactively invest in diligence before misaligned expectations systematically and tangibly manifest themselves in the form of conflicted staff, schizophrenic branding campaigns, operational deficiencies, and ultimately failed ventures.”
Work With a Business Lawyer in Santa Fe to Craft Your Partnership Agreement to Avoid a Partnership Dispute
While the particular terms of a partnership agreement will depend upon the nature of the business, any partnership agreement should clarify each partner’s ownership percentage in the business, how profits and losses will be divided, how partners share authority, and specific terms for making decisions and resolving disputes that may arise.
As you draft your partnership agreement, you should think about worst-case-scenario situations concerning the business as you consider the partnership. By addressing potential problems, you can make plans for such issues to be resolved effectively.
Seek Out Business Partners with Similar Goals and Complementary Abilities
If you seek out business partners who have similar goals, and with whom you have complementary abilities, the partnership may be more likely to flourish.
Contact Our Santa Fe Business Litigation Lawyers
If you have questions about drafting a partnership agreement with an eye toward avoiding a partnership dispute in the future, or if you need assistance handling a current partnership dispute, one of our experienced Santa Fe business litigation attorneys can assist you. Contact Slate Stern Law today to find out more about options for avoiding and resolving partnership disputes, and how our firm can help.