If you are a business owner, you may have entered into a partnership or a shareholder agreement with other parties to run your company. These agreements can provide many benefits, such as pooling resources, skills, and expertise, sharing risks and responsibilities, and creating a common vision and strategy.
However, they can also lead to conflicts and disputes if the parties have different expectations, interests, or goals or if they breach their contractual or fiduciary duties.
So, it’s important to either stop them from happening in the first place or solve them quickly and well when they do.
Here are some tips on avoiding them and what to do when they happen:
Have a clear and comprehensive agreement.
One of the best ways to prevent disputes is to have a written agreement that covers all the essential aspects of your partnership or shareholder relationship, such as ownership structure, management roles, decision-making processes, profit distribution, dispute resolution mechanisms, exit clauses, and so on.
The agreement should be drafted by a qualified lawyer and signed by all parties. It should also be reviewed and updated regularly to reflect any changes in the business or the relationship.
Seek professional advice.
If you are facing a potential dispute with your partner or shareholder that you are unsure about, there’s no doubt seeking professional advice from a lawyer can help you.
Lawyers can help you understand your rights and responsibilities under the agreement, weigh the pros and cons of your position, look for possible solutions, and negotiate with the other party in a productive way.
Litigate as a last resort.
Now if your team of lawyers has done everything and reached nowhere, you may have no choice but to litigate your dispute in court. It can get very expensive, lengthy, and stressful for all parties. It can bring unwanted and biased attention toward your business and damage your reputation.
Furthermore, litigation can result in a win-lose scenario where one party prevails over the other at the expense of their relationship.
Therefore, (and your lawyers will tell you about this at the outset), you should only litigate if you have a strong case and if you are prepared for the consequences.
For more information, visit https://www.melaw.ca/