Partners dispute

What Are the Main Causes of Partnership Disputes?

By David Hood
Partnership Chair

A partnership can be a profitable endeavor for two or more individuals. However, when partners disagree, the success and profits of the business could be in jeopardy. Our North Carolina business attorneys discuss common partnership disputes in this blog. We also discuss ways you can avoid partnership disputes.

Common Partnership Disputes in North Carolina 

Partnership disputes arise for many reasons. Miscommunication and lack of communication are often causes of partnership disputes. However, the terms and conditions of a partnership agreement, or the lack of an existing partnership agreement, are often reasons partners have arguments. 

Examples of partnership disputes include, but are not limited to:

  • Unequal workloads between the partners
  • Financial disagreements between partners
  • Disparities in profits and losses among partners
  • Lack of transparency for financial matters
  • Breakdown of communication between the partners
  • Disputes as to the direction of the company
  • Conflicts over hiring and firing employees
  • Business strategy conflicts
  • Breach of the partnership agreement 
  • Negligence and/or wrongdoing by a partner 
  • Breach of fiduciary duty

If you own an interest in a partnership, it is crucial that you spend sufficient time planning and preparing before entering a partnership with someone. Advance planning with the help of a business lawyer can reduce the risk of partnership disputes later. All partners should be willing to enter into a partnership agreement and must have a clear understanding of the terms of the partnership agreement. Without this agreement and understanding, it is more likely that disputes may arise between the partners as they attempt to operate the business together. 

Tips for Preventing Partnership Disputes in North Carolina 

Communication is a key element of a successful partnership. Partners who cannot or will not communicate freely and clearly are bound to have disputes and conflicts. 

Ways that you can avoid or decrease the risk of partnership disputes include:

  • Establish precise forms of communication between the partners
  • Outline communication protocols
  • Schedule periodic meetings to update all partners and discuss business matters
  • Establish a written partnership agreement 
  • Consider alternative dispute resolution to avoid partnership litigation, such as working with a mediator or business lawyer
  • Before entering a partnership, compare your goals and values to those held by your potential partners
  • Set clear standards for workloads, duties, and responsibilities
  • Specify in the partnership agreement how day-to-day and long-term decisions are made
  • Be clear on how partnership profits and losses will be split between the partners
  • Include a dispute resolution provision in the partnership agreement

Every partnership will experience disagreements and disputes. A well-crafted partnership agreement can avoid many disputes by settling the issues without incurring unnecessary costs or litigation. A skilled, experienced business attorney can help you draft a partnership agreement that protects the interests of all partners and promotes fair solutions to partnership disputes. 

Contact Us to Schedule a Consultation With a North Carolina Business Attorney

It can be frustrating when partners disagree. However, it can also be costly and could result in the business closing. If you are involved in a partnership dispute, you need trusted legal counsel to help you protect your interest in the company. Call Patrick, Harper & Dixon to schedule a consultation with one of our experienced North Carolina partnership dispute attorneys.

About the Author
David W. Hood, Partnership Chair of the Firm, is a trial attorney in a wide-ranging civil practice with over 200 jury trials to his credit. His concentrations include Business Disputes, Construction Law, Personal Injury and Collections. He is also a certified mediator, helping to settle cases pending in both state and federal court. He recently finished his term as President of the North Carolina Association of Defense Attorneys, the organization for lawyers representing business interests in civil litigation. Mr. Hood has spoken to lawyers and industry groups on such topics as evidence rules, contractor liens on real estate and contract funds, underinsured and uninsured motorist coverage, litigation ethics, and real estate claims.