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Just like any other related business relations are also to be maintained and be taken care of for a smooth running successful business.

Structured planning, properly framed agreements and mutual understating must be there while keeping partnerships.

However, disputes may arise because of disparities in understanding.

The following are the reason detailed for Common Partnerships Disputes:

A breach of fiduciary duty:

  1. Partners owe a duty to each other, to act in the best interests of the business.
  1. They should not misuse company funds, and should not take the business on the sole ground of personal benefit, which in turn would harm the interests of the partnership.
  2. If a partner acts inappropriately, this could be a serious dispute that can sometimes result in legal action, also sometimes set the stage to dissolve the partnership

Disputes over the use of financial resources:

  1. This comes as one of the top causes of partnership disagreements disputes about financial rights and obligations generally arises when the company is undergoing financial stress.
  2. When there is no clarity in the partnership agreement about how liabilities to be managed and how the profits to be distributed, serious management-level problems are bound to occur.
  3. Using assets for one's personal use is yet another cause for financial disputes between partners. Sometimes, one partner may think it is fine to use the company car to run personal benefit, but the other does not.

A failure to decide authority:

  1. Sometimes, even after having a clear partnership agreement, partners don't respect each other's areas of expertise and tend to overstep their boundaries.
  2. Resulting in which some things end up not getting done by anybody, and some other things don't get done because there are too many partners sticking their nose into the same thing and offering different perspectives.
  3. The best solution to this is to establish a chain-of-command and separate areas of authority.

Unfair distribution of workload:

  1. These disputes arise when one person does more work than the other and yet profits are distributed equally between the two partners.
  2. Partners need to understand that strength of a business comes from numbers. If one partner is constantly bearing a larger portion of the workload burden, apparently the relationship gets stressed over time.
  3. It is to be understood that the entire point of a partnership is an equal division of responsibilities towards the business.

Income disputes:

  1. If one partner prefers investing the money in marketing, and the other partner is more intent on introducing a new product into the market, disparities in work may occur.
  2. If partners are not careful, conflict on small things can quickly turn into a big problem.

Disagreements over Companies objective:

  1. Often seen that business partners have a certain direction for the business in their mind which may differ from the other partner's objectives for the company.
  2. For example, let say one partner may want to expand the business in a different location while the other may not want to expand it so soon and explore the current market.
  3. If partners constantly disagree on what direction their business should head in, the company may split into two.

In a business partnership, disputes may arise despite one’s effort to run the business.More Expertise and guide, feel free to contact us

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