Business dissolution is an unhappy yet common occurrence in every business sector. Business partnerships are like marriages where the two partners willingly go down the trade pathway and equally share the profit or loss.
Alternatively, the partner with a higher stake or monetary input may enjoy higher profits as compared to the minor partner’s rights (it would be helpful if the partners entered into a clear and defined business agreement about these matters).
However, dissolving a business will also include a division of business assets. The whole process is complex and necessitates the involvement of civil lawyers Subiaco. Let’s check the crucial aspects associated with partners’ disagreement over dissolving a business.
A business partnership, like a de facto relationship, can be established by conduct. Similarly, the formal documentation that finalizes the relationship between two business partners is the Deed or Agreement of Partnership. It is always better to go through a deed or agreement because the “rules” of the business relationship are mentioned in writing and are far more fitting in court proceedings (if needed).
The business partnership agreement benefits can differ according to the relationship of the members and the enterprise’s complexity. The agreement generally deals with the following topics:
The methods of dissolution and liquidation of partnership, along with valuing and distributing assets.
The same legislature covers the law dealing with business partnerships dispute resolution as contracts and statutes, i.e., the Partnership Act 1891, which is still in effect for these cases. It mentions different ways a partnership can terminated, as mentioned below:
Whether your partner has decided or agreed to leave the professional enterprise, they must do so in writing – otherwise, the question of whether they will remain responsible for the ongoing debts of the partnership will arise. It’s also better to use another accountant to carry out the partnership termination because the involvement of the partnership accountant can give rise to conflict-of-interest arguments.
Best of all, you can hire the recommended dispute resolution lawyers Perth from our most recommended legal agency for expert handling of the cases.
The effect of the dissolution of business partnerships falls on everyone involved. The whole thing becomes messy with time, so it is best for everyone to solve it quickly and move on. If the partners have written documents, the process becomes smooth. So, the different outcomes you can experience when your partner disagrees on something during partnership conclusion are given below:
The first step in resolving a disagreement in a partnership is attempting negotiation and mediation. You can engage a trained mediator and get all the parties to resolve their problems through open communication. It will help everyone understand the perspective of the other person through positive communication. Mediation can create a neutral environment where compromise can be suggested and partnerships preserved.
It is one of the faster and more cost-effective methods of legal proceedings. It helps the partners to retain control over the results, whereas in court cases, the judge imposes a decision.
Other dispute resolution methods like arbitration are possible in case mediation fails. You or your partners can choose unbiased and subject-expert arbitrators who help to reach binding decisions. This process maintains privacy and allows confidential matters to remain secret. ADR allows the partners-in-dispute to collaborate in solving differences and avoid the cost and delay of court proceedings.
Legal action becomes the final step for business dispute resolution when the above two methods fail. You should hire a dissolved partnership firm like us to represent you in court. However, the partners won’t have any control over the outcome – as the judge will listen to the argument of all parties and give a decision according to the law.
So, we have discussed about the various types of partner disagreements and how they are associated with business dissolution. We have also talked about how these disagreements can give rise to various outcomes. In case you need legal help and assistance, the best civil litigation lawyer Perth will offer professional and targeted assistance against any dispute in partnership dissolution!