Common Ways to Resolve Business Partnership Disputes

Fighting with your business partner can drain your personal and financial resources. But the good news is that you can end a business disagreement in several ways, and some options are relatively amicable.

At Berluti McLaughlin & Kutchin LLP, our experienced business attorneys can show you how to resolve partnership disputes and the best options for your specific circumstances.

We have been helping businesses for decades, and our advocacy is award-winning and affordable. Don’t hesitate to contact us when you are ready to tackle a business issue.

Vote on the Matter

The default rule in Massachusetts is that business partners have an equal say in decisions regarding ordinary business matters.

This means that partners often resolve disputes by taking a vote and siding with the majority. However, certain critical decisions, like amending a partnership agreement or admitting a new partner to the business, require consent from all partners.

Partners can also set up their own mechanisms for resolving disputes by writing their rules in a partnership agreement.

Follow the Terms of Your Partnership Agreement

Many partnerships have agreements outlining how to resolve partnership disputes for their business. Such agreements often include clauses that can prevent disputes from escalating.

For instance, a partnership agreement may dictate that partners attend mediation or submit to arbitration as a first step in resolving a dispute.

A partnership agreement might also place a tie-breaker decision in the hands of a third party. These steps can make the dispute resolution process less adversarial and costly than litigation.

Terms of a partnership agreement are generally enforceable in court, and partners are largely free to define their own terms. Referring to the partnership agreement can clarify rights and obligations, and in many cases, the agreement becomes the deciding factor in resolving disagreements.

Bargain for a Resolution

Not every partnership has a partnership agreement in place when a dispute arises. And the same partnership that doesn’t have an agreement might also have an even number of partners, making the option of going with the majority vote more difficult.

Under these circumstances, partners might have to negotiate to solve their issues. A partner might agree to take on more responsibilities in the partnership or give up some of their partnership interest to get majority consent to end a dispute.

BMK’s knowledgeable attorneys can help you negotiate the terms of an agreement to resolve a dispute. In our negotiations, we help ensure that you protect your interests and rights as a business owner.

Ask the Court to Decide

When they cannot resolve a business partnership dispute on their own, one or more partners may choose to file a civil lawsuit. Under Massachusetts law, a partner has the right to bring an action against other partners for legal relief. Massachusetts courts can:

Enforce the terms of a partnership agreement,
Order specific performance,
Compel a partner to account for profits,
Award damages, or
Dissolve the partnership.

Typically, litigation is a last resort due to the time, costs, and strain it can place on the partnership and personal relationships. We can help you avoid litigation. And if litigation is necessary, our skilled attorneys can help ensure your case runs smoothly.

Get Out of the Partnership

If a dispute is severe enough that continuing the partnership becomes unviable, leaving the partnership or dissolving the business altogether may be the right option. If you want to know how to get out of a bad business partnership, we can show you the way.

How to Get Out of a Bad Business Partnership Alone

You can leave a partnership on your own while the business continues, but you may be liable for the partnership’s debts and obligations if you don’t leave correctly. You can discharge your liabilities by agreeing with the remaining partners and any creditors to whom you owe money or a service.

When you leave, you have the right to receive repayment for your contributions and the obligation to contribute toward the partnership’s losses.

How to Dissolve a Partnership

Many events might trigger the complete dissolution of a partnership, including unresolvable business partner disputes. Partners can agree to dissolve the partnership or seek a court order to end the business.

If you dissolve the business, commonwealth law provides guidance on the winding-up process, which includes:

Settling partnership debts,
Paying partnership losses, and
Distributing partnership assets.

Partners who have not wrongfully dissolved the business can wind up the partnership’s affairs by themselves. However, partners can also ask the court to oversee the winding-up process.

We Can Help You Make the Best Business Decisions

As a business owner, you are the master of your own ship, but BMK can help you steer that ship in the right direction. We are business-minded, top-rated attorneys who have decades of combined experience.

We customize the best strategies for Massachusetts business owners and can do the same for you at an affordable price. If you are a business owner with questions, please call or contact us online to schedule an appointment.

Resource List

Mass. Gen. Laws, Title XV, Chapter 108A, §36, link
Mass. Gen. Laws, Title XV, Chapter 108A, §22, link
Mass. Gen. Laws, Title XV, Chapter 108A, §31, link
Mass. Gen. Laws, Title XV, Chapter 108A, §40, link
Mass. Gen. Laws, Title XV, Chapter 108A, §37, link