Navigating Business Partner Disputes

Navigating Business Partner Disputes

Deciding to go into business can be an exciting time, however, it can also be difficult if one or more of your business partners breaches all or some part of the partnership contract. These kinds of business partner disputes often surface when fiduciary duties are not met by one or more of the business partners.

In the American legal system, a fiduciary duty is held to the highest standard of care. When settling these types of cases, a conflict or dispute can be remedied with negotiation, arbitration, mediation, and as a last defense, court. Business partner disputes are often complex and never ideal.

If you find yourself in conflict with your business partners, make sure to practice due diligence when weighing your legal options before you make any rash decisions. Your choices for settling a dispute may depend on different business laws that vary by state, the nature of your business, and any terms or conditions outlined in your contract.

Do business partner disputes sound confusing? They certainly can be. But ​​​that’s why it’s always advised that business owners have an attorney on retainer who’s well-versed in state and federal business laws.

Settling Disputes: Know Your Options

One of the most important factors of any successful relationship, professional or otherwise, is communication. Ideally, both or all partners should feel comfortable expressing their feelings about something they disagree with or otherwise have concerns about.

If both parties are willing to find a solution, here are some legal tactics you can try in order to save your business:


Negotiating is one way to handle business partner disputes. Before making any big decisions about the future of your business, talk to your business partner and see if there is any way you can reach a compromise. Make sure your goals for the business are still on the same page. Hopefully, a reasonable settlement can be decided upon without the need for lawyers or court.


Depending on the nature of the dispute, it may be hard for both parties to set aside their feelings to look objectively at the situation. In this instance, a mediator can be helpful in finding a solution.

A mediator is a non-biased third party that is hired by both parties to help settle business disputes. Mediators are trained to find resolution techniques and middle ground between the disputing parties. There is a fee for this service, but it’s far more affordable than a lawyer’s retainer and additional court fees. Not to mention, the cost of saving your business which is priceless.

Management Agreements

People who have been in business long enough may plan in advance for business partner disputes, since they are often a side effect of working alongside other humans. These agreements may contain bylaws or other operating agreements in writing, detailing how certain disputes ought to be handled. Having this document prepared in advance could be helpful when emotions are high and it’s hard to think clearly about what to do next.

These agreements may look different from company to company, depending on the nature of the business. Some agreements require the use of mediators or specify one partner over the other to have a final say. If the dispute cannot be resolved, management agreements may give one business partner the right to buy the other out.

Ideally, these agreements are designed to prevent business partner disputes from disrupting the flow of the business and getting out of hand to a point where business lawyers need to get involved.

Court Action

If the legal tactics listed above don’t solve the issue, then the next step is to have a judge settle the dispute.

One business partner can bring a civil suit against the other in an attempt to take control of the business. A judge has the ability to either set a price for a buyout or dissolve the business completely. The final decision depends on the structure of the business and individual state laws. A recent ruling by Florida’s Fourth Circuit Court of Appeals in what’s being called “The Taubenfeld Decision,” sets the stage for a legal precedent that can more adversely impact business owners who break up with their business partners by drowning them in litigation proceedings that could potentially last for years.

Breaking Up

Rather than go to court and have a judge dissolve the business, some partners decide that it’s easier (and less expensive) to dissolve it on their own. Still, you may need to consult an attorney about an “exit strategy” before you officially part ways. You’ll need to properly divide up assets and make sure that each partner is paid for their contribution as co-owners. Otherwise, you could find yourself tied up in lawsuits for months or even years to come.

Let Xander Law Group Resolve Your Business Partner Dispute

If you find yourself involved in a business partner dispute, first, don’t panic. The experienced legal team at Xander Law Group can help. We specialize in all sectors of Florida business law.  To learn more about your legal options or to schedule a consultation about your case with a Miami business attorney, call our law office today at 305-767-2001

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