Disagreements between business partners are common and, in many cases, unavoidable. Different perspectives can drive innovation and strategic growth. However, when those differences escalate into serious conflict, they can threaten the stability and future of a shared company.
If you and your business partner are at odds, it is important to take measured steps to resolve the dispute before it damages your business and/or ends up in litigation. In New Jersey, business partners have both legal and fiduciary obligations to one another, which makes navigating disputes a complex but manageable process. Oftentimes, seeking legal guidance is necessary to protect the interests of all partners involved, and that’s okay. With so much at stake, it is far preferable to be safe rather than sorry.
Addressing the concern(s) at issue
The first step is to review your partnership agreement or operating agreement. These documents typically outline how decisions are made, how profits and responsibilities are divided and how disputes should be handled. A well-drafted agreement may include provisions concerning mediation, buyout options or voting procedures that provide a clear roadmap for resolving conflicts. If you do not have a formal agreement or your current agreement does not cover the current dispute, you may need to rely on default rules under New Jersey business law.
Open and honest communication is often the next best step. Many disputes stem from miscommunication or unmet expectations. Schedule a time to discuss the issue with your partner in a calm, professional setting. If direct communication is not productive, legal intervention may be necessary.
In New Jersey, civil litigation can be used to resolve partnership disputes involving breach of fiduciary duty, misuse of funds or violations of a partnership agreement. Courts will generally try to preserve the business relationship, if possible, but they can intervene more aggressively when one partner’s actions are harmful to the company or the rights of the other.
Partnership disputes can quickly become legally and financially complicated. But disagreements do not have to destroy your business. With legal guidance and a willingness to seek resolution, many disputes can be managed effectively—allowing a business to continue operating and both partners to protect their interests all at once.