What Should Business Owners Know About Partnership Disputes?

Business partnerships are some of the oldest and most popular legal structures for Illinois businesses. Partnership disputes may inevitably come up in the course of doing business as partners disagree on goals or financial obligations, for instance, or when one partner breaches a fiduciary duty to the partnership. Unless business partners have entered into a partnership agreement, the Illinois Revised Uniform Partnership Act (RUPA) provides default rules governing the creation and running of a partnership and comes into play when partnership disputes occur. An experienced business attorney can advise business partners on the best way to resolve partnership disputes. 

Common Reasons For Partnership Disputes

As with any partnership, business partners may have disagreements about how to run their business, but a few of the most common and serious issues that can lead to partnership disputes include breach of fiduciary duties, breach of contract, fraud, disagreements about whether to sell the partnership or continue the business, fraud, and misuse of trade secrets. 

Approaches to Resolving Partnership Disputes

A quick and efficient resolution to a partnership dispute can benefit a partnership by safeguarding its growth and bottom line. To that end, there are several potential solutions besides litigation:

• Partnership agreements: Arguably one of the most effective ways of resolving and even avoiding partnership disputes is to have a solid partnership agreement in place. A well-drafted partnership agreement can ensure that a business already has solutions to resolve the most common disputes that take into account the interests of both the parties and the business. Partnership agreements should also address an exit strategy if one partner wants to leave the company.
• Mediation: This method of alternative dispute resolution can provide a way for the parties to hash out their differences outside the courtroom to reach a resolution, and can be binding on the partners.
• Dissociation: The RUPA provides this means for partners to leave or be removed from a partnership without terminating it. 
• Dissolution: If the parties cannot continue their partnership, they may decide to dissolve it. Otherwise, if only one party wants to dissolve the partnership, they may seek judicial dissolution in the courts.
• Arbitration: This process can often resolve disputes in a more formal process before a private arbitrator, who acts much like a judge. Arbitration rulings are binding on the parties and can be a faster and more cost-effective resolution than litigation when other informal methods do not work. 

Contact Our Naperville, IL Business Partnership Disputes Attorney

Partnership disputes can be challenging for a business. A competent and experienced business attorney can advise partners on navigating the complexities of these disagreements and finding solutions. Contact the Naperville, IL business transaction lawyer at the Gierach Law Firm for legal assistance. Call 630-228-9413 to schedule a consultation and discuss your partnership dispute.