When you go into business with one or more other individuals as partners, it is a good idea to draft a partnership agreement that will serve as the foundation of your professional relationship. This agreement can be a binding contract that keeps business running smoothly and can even play a crucial role in resolving disputes.
Different people are bound to have different goals and ideals, so it is nearly inevitable that business partners will encounter either small or large disputes. Knowing exactly how a partnership agreement can help resolve such disputes can ensure that these types of conflicts will not be catastrophic for the company.
Establishing boundaries in the partnership
Many disputes between business partners arise because one party believes that the other is overstepping its boundaries. For example, one individual might make an important decision without consulting the other party or they might attempt to exert authority over a department of the business that is the jurisdiction of a different partner. A well-written partnership agreement will clearly outline these boundaries ahead of time and should be available for partners to review so that disputes can resolve quickly.
Outlining a dispute resolution process
For more complex or sensitive disputes, it may be impossible to reach a resolution simply by referring to the terms of the partnership agreement. Even so, the agreement itself can facilitate a favorable outcome by providing a mutually-agreeable dispute resolution process. One way to accomplish this might be to bind partners to undergo mediation in the event of a prolonged dispute when they initially sign the partnership agreement.
In an ideal situation, a partnership agreement will prevent most disputes before they can escalate. For more dire circumstances, a partnership agreement can still save professional relationships by providing a thorough dispute resolution process.