It’s no secret that an ounce of prevention is worth a pound of cure. When drawing up an initial member agreement, partners should try to plan for any incident, no matter how unlikely it seems at that time. This document should include a procedure for resolving deadlocks between members, either by designating a third party or calling for a vote, or creating some alternative plan for ending a stalemate. An exit strategy could also be included should two partners feel unable to reach a satisfactory conclusion and may want to sell out their interest in the company.
Enlist a skilled business lawyer for insight into common terms and for council on creating a comprehensive road map for the new partnership.
Resolving Conflicts and Disputes
When business partners are not able to resolve contract disputes on their own, they must turn to one or more of several options:
You and your partner have likely already attempted some form of negotiation, the back-and-forth communication that tries to find a solution to an initial problem. Voluntary, private, and inexpensive, negotiation is also informal and unstructured, and still relies on the the two parties most closely involved, often without a third unbiased participant.
In mediation, an impartial third party helps with communication and promotes reconciliation between the parties in order to help them in reaching a mutually acceptable agreement. Voluntary, informal, and flexible, mediation is often the second step towards resolving conflict when reduced hostility and the preservation of an ongoing relationship are priorities.
When the disputed matter is brought to an impartial third party for a decision, it becomes arbitration, which can be voluntary, is usually quicker, and still gives both participants the chance to present their case for a decision. Arbitration can be nonbinding, giving partners the chance to seek a trial after a decision, or both parties can formally agree to abide by the arbitrator’s ruling.
The final step towards resolution of contract disputes is going to court, or litigation, used to compel the disagreeing party to participate in the decision of a judge or jury. In this course of action, one or more parties files a lawsuit in court requesting a ruling on the case. The other partners are required to participate in the process, and must abide by the final ruling.
Each of these possibilities carries its own pros and cons, and the option that is best for your scenario depends entirely on the unique details of your case. Has this dispute been ongoing for a while now? Is there interest in salvaging the partnership or friendship after the dispute has been settled? Are you and your partner(s) at an impasse? Contact the legal offices of Simon Law Group for expert counsel on which route will best facilitate a resolution to your contract dispute case