Business partnerships do not always go as smoothly as people hope. Disagreements and disputes can happen. In the most serious cases, business partners could end up in litigation against one another.
Understanding why this happens can help in two ways. Some business partners may be able to avoid these disputes. Others will simply know when it’s time to begin looking into their legal options to protect their company and their future.
Power isn’t distributed evenly
Power imbalances are a major issue, especially when they shouldn’t exist. If two people own 50% of a business together, they need to work together to make key decisions about the business’s direction, who to hire and much more. But if one person starts making all these decisions on their own, the other business owner may feel that they are being pushed aside or that their rights as an owner aren’t being respected.
Financial inequality
A similar issue is when there is some level of inequality in the financial relationship. Maybe one person feels like they are always asked to invest more, or perhaps the business’s earnings aren’t split up evenly. Disputes can arise over the misappropriation of funds or disagreements about who gets to make financial decisions.
Changes to the business
Many of these disputes involve significant changes. For instance, one person may want to bring on more partners, while the other partner refuses. One person may want to sell, while the other wants to keep the company.
Litigation is sometimes necessary to navigate these complex situations, so it’s important for business partners to know what legal steps to take.