According to the United States Census Bureau, approximately 543,000 new businesses get started every month. The small business landscape in America changes in accordance with the economy. Recently, 1.6 million partnerships have started up business in America. However, more employer businesses shut down yearly than open shop.
There are approximately 1.6 million partnership in America. Businesses are combining their talents and funds in hopes of making a successful partnership to fuel a prosperous business. Although partnerships are formed with high hopes and expectations, disputes are bound to occur. Understanding the business partnership and common disputes that may arise will create a stronger partnership with unlimited potential.
What is a business partnership?
Knowing exactly what defines a partnership is important. A Partnership is formed with an association of two or more persons engaged in a business enterprise, of which the profits and losses are shared proportionally. The Revised Uniform Partnership Act provides a legal definition of partnership as being an “association of two or more persons to carry on as co-owners of a business for profit.”
Many partnerships are formed with specific business goals in mind, such as marketing a product that combines two separate aspects of business, expanding a clientele base or conducting market research for current trends. Once a partnership is formed, the rights and responsibilities of each partner should be formed within a written agreement.
What are common partnership disputes?
The absolute biggest mistake that partners can make is to establish a business or a joint venture without a written agreement clearly stating the rights and responsibilities of each partner. The written agreement should establish clear rights and responsibilities, account for worst case scenarios, avoid ambiguities and address potential misunderstandings. Common partnership disputes are: violation of a non-compete clause, breach of contract, breach of the business partnership agreement, violations regarding insider trading and unauthorized disclosure of confidential information.
How are partnership disputes typically resolved?
Business partnership disputes will often lead to a lawsuit. When the dispute cannot be resolved between the partners, a lawsuit may be necessary to determine which party is at fault or which rights have been violated. The court may review the business partnership agreement in order to determine the rights and responsibilities of each party within the dispute. At this point, damages may be awarded to the non-breaching party. A lawsuit may be avoided if the parties involved in the law suit decide to resolve their dispute through mediation or alternative dispute resolution (ADR). Typically, parties can minimize costs through mediation and ADR.
Business partners are often involved in complicated legal disputes, involving multiple legal issues. If you find that you or your business partners are involved in a dispute, then you should seek legal advice immediately. Mediation or ADR may be able to assist the partners with resolving the dispute. However, often times a resolution cannot be reached through the mediation or ADR process. The right legal counsel will zealously advocate for you and protect your rights in a court of law.
If you are having business related issues and would like to seek outside counsel, contact The Las Vegas Business Litigation Lawyers at The Dean Legal Group, 702-823-1354, to schedule a consultation.