Starting a company with a partner can be rewarding. Working with someone you trust to come up with ideas and help you promote your products and services is enjoyable and makes the work more manageable. However, disputes can arise in business, even if you’re working with a friend. Disagreements when it comes to a business can be lengthy and often ruin your personal and professional relationship. However, putting in some upfront effort can reduce the risk of business litigation disputes. Here is some important information to consider if you’re a Minnesota resident and thinking about getting a business partner.
Draft a written contract
The first thing you should do when it comes to business litigation is to have a contract in place. Depending on the type of company, you can create a partnership agreement or an operating agreement.
The agreement should clearly explain each partner’s role in the business as well as who has control of the business and how much of the company each party controls. Be that your written agreement dictates each partner’s obligations and duties, capital contributions, distribution, and compensation.
Even though you may not want to think about it, your contract should also provide clear instructions for what will happen if there is a professional conflict or if co-founders or partners are removed from the business.
More on business contracts
Even though you may discuss the terms of business litigation with your partner, it’s important to have all the terms in writing. You and your partner should know when your professional obligations end and when your responsibilities can be terminated. In many cases, disputes occur when the terms of a business contract or not clear. The more detail you provide in your agreement, the better. If you face an unexpected issue, make sure there is a specific set of instructions for resolution.