No one goes into business planning to fail, but it is reasonable to expect problems to arise at some point. For example, partnership disputes happen more often than one might think. Business partners in Texas can help themselves and their companies by planning for these disputes long before they happen.
Management agreements are what business partners can use to plan for the handling of future disputes. These agreements can be highly detailed and cover a number of topics. Items commonly addressed include:
- Acceptable dispute resolution methods
- Buy-out stipulations
- Partner roles and responsibilities
As far as acceptable dispute resolution methods go, private negotiations between both parties are usually the best place to start. As negotiations sometimes fail, however, and there is a desire to avoid litigation, the required use of alternative dispute resolution methods, such as mediation or arbitration, can be included in the management agreement. The benefits of using an ADR method include cost and time savings, which are beneficial to everyone involved. If a resolution cannot be achieved through any of these methods or the terms set forth in the management agreement, court action may be necessary — but this is generally considered only as a last resort.
Partnership disputes can be over big or small things. Sometimes they can be worked out with little effect on the business or partnership, but sometimes these disputes can lead to the demise of the partnership. Every case is different. With the assistance of counsel, business partners in Texas can create plans for dealing with disputes at the outset and seek further assistance putting those plans to work if needed down the line.