Common Disputes among Partnerships and Shareholders

People rarely enter into partnership agreements expecting to experience conflicts. However, it is common for partners to disagree about fundamental issues related to the business. Therefore, many partnership agreements outline how partners and shareholders should solve disputes to avoid costly litigation.

Even with detailed agreements, partners may not always be able to resolve these disputes independently. When conflict resolution seems impossible, seeking help through legal counsel is a highly recommended and viable option. 

How Disputes Emerge

Partners who actively participate in the business's daily operations have a greater chance of disputes arising between them. Unfortunately, this can lead to partnership dissolution, and any attempt to solve the conflict may compromise the business. Therefore, most partners and shareholders opt to explore litigation.

Common Shareholder and Partnership Disputes

Partnership and shareholder disputes can be costly and time-consuming. However, understanding the common shareholder and partnership disputes allows you to mitigate any potential damage to the business. Here are some of the most common partnership and shareholder disputes include:

• Buy-Sell agreements: Disputes may arise when assets that belong to the business are being sold or purchased. If there is no agreement, these conflicts may jeopardize the business operations.

• Management deadlock: These types of disputes arise when there is no written partnership agreement, and the management disagrees on how to take the business forward without litigation.

• Breach of contract: This type of dispute occurs when a partner or shareholder alleges that the other party has breached the contract. A breach of contract occurs when one party fails to meet the contract's requirements without any legal excuse.

• Corporate regulation violations: If shareholders or partners violate company bylaws, disputes may arise to an extent where litigation may be necessary.

• Succession planning: Business succession can be complex and even more complicated when some partners or shareholders fail to play nice. These disputes are common in a family-owned business where shareholders may question the partnership's succession planning.

• Executive Compensation: Sometimes, high-level executives may have salaries and health benefits that don't commensurate with their value. The stakes are high, and neither of the parties wants to incur losses.

Resolving Shareholder and Partnership Disputes

When shareholder and partnership disputes arise, the parties involved may try to resolve them independently. However, despite the cooperation between the parties involved, resolving disputes outside court may not be easy. When it is clear that litigation is needed, hiring the right Waxahachie Business Attorney is essential. A business attorney can also come in handy to aid in mediation or dissolution to prevent the situation from escalating.

Schedule a Consultation with a Waxahachie Business Attorney

As soon as there is a dispute that management can't handle on its own, reaching out to a business attorney from Foster Massengill is appropriate.

‍Contact Foster Massengill to discover how they can help resolve shareholder and partnership disputes.