Resolving business partner disputes: Perth

It is a fact of life that we can’t all agree on everything. A dispute can arise with an employee, a contractor, a supplier or a competitor. But what happens when you disagree with the very person you do business with?

Lawyers Perth Estate Planning

Resolving business partner disputes

Like a symphony, business partner disputes can be minor or major. Perhaps your partner is not turning up to work on time, or his or her sales have not been up to scratch. Perhaps a frank conversation on the golf course or over lunch is all that is needed to address the issue and for the parties to get on with running the business.

Unfortunately, not all disputes can be resolved so easily. Sometimes the other party’s conduct is so persistent and severe that an amicable resolution cannot be achieved and you need to take decisive action.

Causes of disputes

In our experience, some of the common causes of partnership disputes include:

  • Your partner is hiding something from you. In this case, you may have reason to believe that your co-partner is using the business as a ‘slush fund’ to purchase personal items with the partnership income.
  • Your partner is not performing properly. In this case, your co-partner is simply not performing his or her side of the bargain. You may already have exhausted all attempts to get them to lift their game.
  • Your partner starts a business that competes with your own. There is nothing worse than investing considerable time and energy into developing intellectual property, only to find that your partner uses that information to start a competing business.

Remedies

It is important to seek advice from the outset. A lawyer can help identify whether you have any remedies available.

The starting point is to confirm the nature of your business relationship. For example, many people think they are ‘partners’ when in fact, they are actually shareholders in a company or unit holders in a unit trust.

Whether you operate as a partnership, company or unit trust will influence the remedies that might be available. In any case, the relevant partnership, shareholder or unit holder agreement, if any, should contain specific provisions for resolving disputes.

For example, the agreement may contain a buy-out clause enabling you to purchase the other party’s interest at a pre-agreed rate. This can be helpful where, for example, there is value in continuing the business, and you wish to do so alone.

In other cases, the agreement may contain procedures for commencing arbitration, mediation or litigation. Mediation is usually less confrontational than litigation and arbitration and might be preferable where the parties intend to continue their working relationship.

If there is no written agreement in place, then remedies might be available under the general law (eg an account of profits).

If you would like to discuss your particular situation, why not contact our Principal, Vincent Holland.