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Verbal agreements and partnership disputes

On Behalf of | Mar 29, 2022 | Business & Commercial Law |

If you are currently in the middle of a partnership dispute, you probably have many concerns and it is very important to look at the situation from an individualized point of view. Every partnership is unique, and you need to address your concerns properly. The outcome of a partnership dispute could significantly impact the future of your business as well as your finances.

Many partnerships involve written agreements, which can avoid confusion and make it easier to resolve disagreements. However, some business partnerships only involve a verbal agreement

Verbal agreements can lead to disputes

The New Jersey Business Action Center states that written agreements between business partners are not required by law, and people can form business partnerships through verbal agreements. However, this comes with potential drawbacks, particularly when partners share losses and profits. Even when each party has good intentions, verbal agreements are prone to misinterpretation, especially as time passes. This can lead to confusion and a costly dispute that ultimately causes a partnership to fail.

Preparing for a partnership dispute

If you are forming a business partnership, it is very important to understand how written agreements can protect you. Relying on a verbal agreement carries risks, and you should make sure that you carefully draft an effective written agreement that safeguards the interests of each party.

If a dispute has already surfaced and you do not have a written agreement in place, you should review all of your options and identify the appropriate course of action. Make sure you prepare, especially if you are struggling with a serious dispute that you cannot resolve outside of court.