Commercial
Disputes

Business Partner Disputes

Disputes between business partners can have devastating financial and legal consequences. We help you to navigate this challenging time in a methodical and strategic manner.

Seeing eye-to-eye with your business partner on everything is a perhaps unrealistic expectation. Disagreements between business partners are not only common but should be viewed as an inevitable part of running a business with a co-owner.

When a disagreement threatens to spill over into a full blown dispute, there are a series of steps that ought to be taken to strategically navigate the situation. Failing to carefully navigate the dispute process can result in poor outcomes and regret. Conversely, a carefully developed and methodically executed strategy plan will likely result in a better outcome.

We assist with:

leaving a business partnership;
directors duties claims;
shareholder oppression / minority oppression claims;
forced buyouts;
litigation and Court matters; and
mediation and alternative dispute resolution.

Approach

Seeing eye-to-eye with your business partner on everything is a perhaps unrealistic expectation. Disagreements between business partners are not only common but should be viewed as an inevitable part of running a business with a co-owner.

When a disagreement threatens to spill over into a full blown dispute, there are a series of steps that ought to be taken to strategically navigate the situation. Failing to carefully navigate the dispute process can result in poor outcomes and regret. Conversely, a carefully developed and methodically executed strategy plan will likely result in a better outcome.

We assist with:

leaving a business partnership;
directors duties claims;
shareholder oppression / minority oppression claims;
forced buyouts;
litigation and Court matters; and
mediation and alternative dispute resolution.

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What is business co-ownership?

Where a business has multiple owners. For example, if you own 50% of a business and someone else owns the other 50%, you two are in a business co-ownership relationship because you do not own the relevant company entirely yourself.

Who commonly enters into a business co-ownership arrangement?

Common people who get involved in business co-ownership arrangements include friends, family members and third party investors.

What can I do to help mitigate the impact of a dispute if it does arise in future?

Enter into a co-ownership agreement (e.g. Shareholders Agreement, Unitholders Agreement or Partnership Agreement) as soon as possible after the inception of the business.

These agreements essentially create a rule book for the co-ownership relationship, and should contain an appropriate dispute resolution process.

When should I get a lawyer involved?

Time is usually of the essence with disputes. We have seen situations in the past where issues have been caused due to clients coming to us too late after the dispute originally arose. So, it is usually sensible to get in touch with a lawyer once the dispute arises.

Do I have to go to Court?

Achieving a mutually agreed outcome outside of Court is usually the first port of call. If that is not possible, seeking the assistance of the Court may be an available option.

How do you charge?

Trust is one of our core values. We pride ourselves on not causing 'bill shock'. Our usual approach is to provide you with a clear and transparent fee quote to ensure that there are no surprises. You can then make an informed decision about whether you want to proceed or not.

I am having a disagreement with my business partner. What do I do?

We usually recommend seeking advice as soon as a dispute arises. This is primarily because disputes can rapidly become more serious if they are not resolved promptly, and strategic errors made in the early stages are often difficult to reverse.

What is the difference between a Shareholders Agreement and a Unitholders Agreement?

The common theme with these contracts is that they regulate the relationship between co-owners. However, the underlying business structure is different. Owners of a company are shareholders (hence, an agreement between them is a Shareholders Agreement). Owners of a unit trust are unitholders (hence, an agreement between them is a Unitholders Agreement).

Can I force my business partner to exit? Can my business partner force me out?

The ability to force out a co-owner depends on the relevant legal landscape that governs the relationship.

The documents that regulate the relationship between the co-owners (e.g. the Shareholders Agreement and Company Constitution) are key aspects of the legal landscape. The terms of these documents can be vastly different from situation to situation. Some of these documents provide a clear forced exit process, others do not. Looking at these documents is usually a sensible first port of call to understand what is and what isn’t possible.

If the documents governing the relationship between the co-owners do not contain a forced exit process, a forced exit can potentially be achieved with the assistance of the Court (e.g. via a winding up or oppression proceedings).

Alternatively, you can seek to negotiate a mutually agreed exit on appropriate terms. Some of the exit methods include: