Getting Past California Partnership Disputes



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Partnership disputes in any business can ground all production and selling processes to a complete halt, and without knowing how to resolve these matters, the partners can see the entity fail long before it should or ordinarily would. Getting past these disputes is crucial to keeping all procedures and methods of business progressing and to keep relationships strong.

What Is a Partnership Dispute?

When one or more partners have an issue with something that happens, a product or service or a method used, he or she can stop production or affect interactions in the company. This dispute usually is with something specific and will affect the other partners. Knowing how to handle both the conflict and the individual is crucial to getting past the dispute in the California business. Stagnant businesses can end and cost all partners everything if the dispute remains in place for too long. A deadlock can also cause severe issues for the partners. If the dispute remains in place, it is possible to use business documentation to handle the problem such as the buy-sell agreement, operations agreement and a shareholder agreement.

Deadlocks in California Businesses

The deadlock in any business is when partners are unable to resolve the conflict that affects the revenue stream because of either production, manufacture or marketing of the products or services. The deadlock occurs because the partners cannot agree on something specific such as what new product to develop, what strategy to use in an advertisement or which process to pursue. Depending on the percentage of ownership in the company, a deadlock can end in the dissolution of the business arrangements, partnership and enterprise. This would end all company prospects and interactions along with any employment,
vendor and client relationships.

Handling the Partner

Some partners are difficult and cause arguments and disputes because they refuse to back down about a topic. Others have a problem with certain processes or paths taken. No matter what the issue is, the partners all together should communicate the matter and determine how best to resolve the issue. This may take an open dialogue and working through each aspect.

However, other partners may have a better grasp of how to handle the partner with the issue such as using certain words or taking the individual to a calming spot. Knowing what to do is critical to keeping the matter progressing to a deadlock or continuing and affecting the business in a negative manner.

Resolving the Dispute

Some partners are able to resolve the dispute with the other partner. In California, it is important to keep the argument or dispute from reaching a deadlock, or there is a risk of the partnership dissolving legally. By reaching some compromise or a new way to progress within the company, all partners can ensure the resolution is something they can live with and makes the best sense for the situation. Many resolutions are a compromise on both party’s parts and may require a different way of thinking or a new process for products, services or even advertising.

Dissolution of the Partnership

If a deadlock occurs or another issue causes the impossibility to continue business, the result is often the dissolution of the partnership. This is usually a complete sale of the business entity through either individual interactions or through a purchase of another owner or company. The sale itself may provide all partners with market value of the interest in the company, but this is not necessarily possible based on the type of sale. If the dissolution is through a deadlock, the state may require the partnership to dissolve without the fair market value attached to the interest.

Buy-Sell Agreement Need

If there are problems that lead to the loss of one or more partners, there is great need to have a buy-sell agreement in place before this happens. This document will specify how to sell and buy the interest in the company from other partners or outside individuals or companies. If there is the threat of a deadlock, this document can help prevent the dissolution of the entire partnership with the sale of interest form the difficult partner to the others. The buy-sell agreement may also have an insurance policy attached to provide funds to purchase the interest.

Legal Support to Get Past the California Partnership Dispute

With the support of a lawyer, it is possible to avoid a deadlock and the dissolution of the partnership. The documents necessary to prevent disaster require legal review and help in setting up and filing with the appropriate authorities.


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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.
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