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What Are the Most Common Causes of Partnership Disputes?

Partnership disputes can damage the business working relationship to the point of breaking up the partnership. It could help you avoid these conflicts if you know what are the most common causes of partnership disputes. Open communication can lead to improved understanding for the partners.

A South Carolina business attorney can provide guidance on how to prevent partnership disputes and handle those that happen. You will be able to focus on the success of the business when you do not have to deal with internal problems.

Misunderstanding What the Partnership Agreement Says

To be perfectly candid, hardly anyone actually reads the entire partnership agreement. They might skim the first page or two then flip through the remaining pages, glancing at the headings. It is no surprise, then, that partners can get into trouble for unintentionally violating terms of the agreement. 

Here is a strategy that could help avoid this problem – go over the agreement together. Either meet in person or remotely by video conference. Go through the document page by page, summarizing what each paragraph says. This approach can also bring to light surprises in the agreement that a partner might disagree with, before either of you sign the document. That situation is likely if you try to use a form you get off the internet rather than having a business attorney draft a document tailored to you and your needs.

Breach of Contract

You might both understand the partnership and enter the business relationship with the best of intentions, but one partner fails to deliver their end of the bargain. For example, one partner was to write an app and the other partner was to market the app. The first partner did not create an app, which breached the contract.  

You might need to talk about the reason for the breach and consider modifying the deliverable dates or bringing on additional support to get the job done. Often, it is better to try to salvage the partnership and continue working toward the goals of the business than to call it quits on the first hiccup. In some situations, however, that might not be a viable option.

Breach of Confidentiality

Your partnership might have confidential information, like your customer database, intellectual property, or trade secrets. If one partner discloses this information to a third party without authorization, there will likely be a partnership dispute. The unauthorized disclosure could be accidental or intentional. The disclosing partner might make a profit from the disclosure or use the confidential information to compete with the partnership.

The partnership agreement should contain language that forbids unauthorized disclosure or use of confidential information of the partnership. The document could explain what constitutes confidential information in the context of this partnership and its industry, as well as specific acts that would be violations. 

These are just a few examples of some common partnership disputes and what causes them. People enter into business partnerships to make money and be successful, not to fight with their partners. A 

A South Carolina Business Attorney can help your partnership stay focused on those goals by avoiding internal conflicts. Get in touch with our office today for a free consultation.