It is a fact of life that business relationships like any other relationship can break down. As well as the financial cost these disputes can often be very emotionally draining and stressful.
Often these occur due to communication breakdowns between the partners or shareholders as to what the expectations of each party are. Other times there is a fundamental disagreement on strategy and how to move the business forward. Sometimes it's simply a result of personality issues arising over a number of years of working together.
These sorts of disputes can never be avoided completely. However the prospects of them occurring and the risk that a disagreement becomes a major partnership dispute can be greatly reduced.
One of the simplest ways to avoid a number of disputes occurring is to ensure you have a proper partnership or shareholders agreement. Properly drafted (and periodically reviewed) such an agreement can ensure that there is less confusion over the roles each party is expected to play.
Keeping proper records of meetings of directors and partners can also ensure that there is less confusion over what has been agreed to previously.
If nothing else a partnership or shareholder agreement can clearly establish dispute resolution procedures and how to dissolve the partnership or sell the business if the dispute cannot be resolved.
Of course this still requires a legal process to be followed but a properly drafted process under a partnership or shareholders agreement is far less costly than the usual court related methods of appointing receivers or provisional liquidators.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
