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What are the Most Common Reasons for Business Partnership Disputes?

Our MLG Business Litigation Group attorneys in Florida and California know that business owners spend countless hours preparing for the next day’s operations — even when they are in the middle of the current day’s workload.

This is one of the many reasons business owners have partners. It allows each of them to take on the portion of the business’s responsibilities that suits their skillset best, so together, they can accomplish more.

However, no matter which industry you are in, or how long you have been in business, if you are a member of an LLC or another partnership, disputes will occur.

Here are a few of the most common reasons why.

Breach of Partnership and/or Operating Agreement

When two or more parties create a formal partnership, they must also prepare the proper partnership documentation that governs the arrangement and provides enforceable terms for operating the business.

Without a solid partnership agreement in place, dispute resolution can come at a detrimental cost to everyone involved. When you establish an effective and legally binding partnership/operating agreement, it should include how disputes will be resolved, so you can place your personal differences aside and move forward with running the company without further interruption.

Breach of Fiduciary Duty

Each business partner has a fiduciary duty to act in good faith in the best interests of the business, by avoiding conflicts of interest. This means they should not act for the benefit of themselves or a third party.

Some of the most common ways fiduciary duty is breached may include, but are not limited to:

  • Gross Waste of Company Resources
  • Inappropriate Actions Leading to Business Losses
  • Misappropriation of Funds
  • Theft of Company Products for Personal Gain

Breaching fiduciary duty can lead to more than disputes, but — depending on the depth of the breach — a lawsuit or, worse, the dissolution of the business.

Failure to Define the Roles & Responsibilities of Each Partner

Entering a partnership should be solidified on more than a handshake. There should be a clear agreement — as mentioned above — that clearly outlines each partner’s roles and responsibilities.

When they are not clearly defined, confusion and inefficiencies will follow, making disputes inevitable.

Abandoning the Partnership

There are going to be multiple times throughout a business partnership when one or all involved may have a family or other personal emergency that requires them to step away from their duties and responsibilities. Some of these occasions can be planned for, while others take a serious toll on their abilities to effectively do their jobs.

These circumstances are very different from one party deciding to walk away from the partnership altogether. This, too, is very different from dissolving the partnership agreement.

This process depends greatly on the details of the partnership or operating agreement and can be legally explored with help from an experienced team of business litigation attorneys. We can help.

Call MLG Business Litigation Attorneys in Florida & California Today

If any of these scenarios has led to an interruption in your business, our experienced Partnership Disputes Attorneys Florida can review your agreement and determine if a lawsuit — or another resolution — is possible in your situation.

Contact our Florida Business Litigation attorney at MLG Business Litigation Group in California today at (786) 706-9228 to schedule a free initial consultation to learn more about our law firm while we learn more about your unique partnership dispute, so we can create the best legal solution for your circumstances.