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Factors in business partnerships that can lead to legal disputes

On Behalf of | Oct 28, 2023 | Business & Commercial Litigation |

According to the Secretary of State Office in Georgia, as of October 2023, there were 10,098 limited partnerships in business throughout the state.

While partnerships are a great way to start and grow a business, they can also lead to disagreements that end up in court. Before entering into this type of entity, it is important to be aware of some of the factors that can result in a legal dispute.

Communication breakdown

A breakdown in communication is one of the most significant causes of partnership feuds. When partners fail to effectively communicate their ideas, expectations and concerns, misunderstandings can fester and escalate.

Financial disagreements

Money matters are often the cause of bickering in a partnership. Differences in financial contributions, profit-sharing or allocation of expenses can spark tension and resentment between partners. Resolving these issues can be challenging and may require legal intervention.

Role and responsibility conflicts

Partnerships thrive when each member has a clearly defined role and set of responsibilities. When partners disagree on who should do what or one partner feels that the other is not pulling their weight, conflicts can arise. This friction can result in litigation if not addressed promptly.

Decision-making disputes

Partners frequently hold differing opinions on how to run the business and which direction it should take. Disputes about key decisions that are not resolved may escalate into legal battles that end up in a courtroom.

Breach of agreement

A partnership agreement is a tool used to define the terms and conditions of a business relationship. When one partner believes the other is not adhering to the agreement, it can lead to claims of breach of contract and potential litigation.

By considering these factors in the beginning, partners can navigate their differences and maintain a healthy and successful business relationship.