Want To Avoid A Partnership Dispute? Six Things That Should Be Addressed In Your Partnership Agreement
A legal dispute with a business partner can be costly. It can be time-consuming, expensive, and, perhaps worst of all, it could even destroy your business. The best way to avoid a partnership dispute is to ensure that you have a comprehensive and well-drafted partnership agreement.
A partnership agreement should thoroughly address all of the key issues related to the business relationship. In this blog post, our Miami partnership dispute lawyers highlight six things that should be included within your partnership agreement in Florida.
- Clarity of Purpose: Each Partner’s Role and Responsibilities
As a starting point, it is important to make sure that you and your business partner(s) are on the same page. Do not make assumptions. Get each partner’s role and responsibilities down in writing. If there is any disagreement on the duties of the partners, it should be addressed proactively.
- A Detailed Explanation of Decision-Making Authority
Who has control over the partnership? How will day-to-day business decisions get made? What about large-scale and more fundamental business decisions? What if partners do not agree on a particular decision? A partnership agreement should include a detailed account of each partner’s control over the business and their decision-making authority. There should be some provisions to resolve disagreements without letting them grow into full blown legal disputes.
- Capital Contributions (Including Any Future Contributions)
How much is each partner investing in the business? Initial capital contributions should be clear. Further, a partnership agreement should generally have some provisions for future capital contribution, should they be deemed necessary.
- Partnership Compensation (Including Distribution Rights)
Many partnership disputes are centered around financial issues. There needs to be clarity on each partner’s right to compensation, including their right to take a distribution from the business. You do not want to end up in a financial conflict with a business partner that could have been avoided.
- Dispute Resolution Provisions
A partnership dispute does not always mean litigation. Indeed, it is best to include dispute resolution provisions within an agreement. For example, business partners may want to require business mediation before a lawsuit can be filed. Under Florida law (Florida Statutes § 44.1011), mediation is a non-binding form of alternative dispute resolution.
- Partnership Exit and Partnership Dissolution Procedures
Business partnerships do not last forever. The reality is that a partner could decide (or be forced) to exit the business unexpectedly. A partnership agreement should generally include a process for what will happen if a partner leaves the business. Partnership dissolution should also be addressed.
Call Our Miami-Dade County Partnership Lawyer for Immediate Help
At Pike & Lustig, LLP, we have extensive experience handling partnership law issues. Our attorneys are dedicated to helping business law clients find the best solution for their situation. If you are locked in a financial or legal dispute with a business partner, our commercial lawyers are here as a resource. Call us now for a confidential case evaluation. Our firm provides legal representation in Miami-Dade County and throughout the surrounding area in Southeastern Florida.