Entering into a business partnership can be one of the most significant decisions you will ever make regarding a relationship; in fact, it may be a sad state of things today regarding marriage statistics—but all too true—to say that business partnerships often live out one marriage, or even more. And for many also, the business partnership is often built on long-term friendships, some that may stem back to childhood, college, or at least the early days. If your company is new, you and your business partner may have created a product, a business model, and a foundation for your company together.
No matter how solid your partnership or your company is in the beginning, however, a partnership contract is critical. Just as your company has a structure, your partnership should have one too, including boundaries, limits, and definitions regarding titles within the company and what each partner is expected to do, along with financial information such as whether shares are distributed equally, or not, when products are distributed, and any other details your attorney and/or accountant may suggest.
And although it may seem unnecessary in the beginning, having a dispute resolution clause spelled out in your contract can make a world of difference when a major dispute—and one that may even be headed to court—arises.
The great thing about such a clause is it allows you to agree on how you will possibly disagree later. You and your partner, or partners, can outline how any legal disputes will be put to rest, whether through litigation, or alternative dispute resolution such as mediation or arbitration. If there are attorney’s fees, the clause may outline who will pay them, as well as designating locations such as what county disputes would be settled in.
Alternative dispute resolution is often the best solution in the face of a legal dispute with a business partner, especially if you are invested in preserving the relationship. Mediation may be best, offering a casual atmosphere where the parties often feel more comfortable talking and are able to work things out much more quickly and affordably.
Do you need legal assistance with a partnership or business dispute? If so, contact the Bolender Law Firm. Our attorneys are experienced in representing clients in state and federal courts, at both the trial and appellate level. Call us at 310-320-0725 now or submit an easy consultation request online. We are here to help!