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When A Business Partner Decides To Take You To Court

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This article has been submitted by Peter Lynn and Partners

Would you prefer to attend worrying that the business documentation you have in place did not cover the matter in hand and you could be liable for crippling costs or would you like the peace of mind that you have the disagreement included in an agreement?

Having the right paperwork in place – be it contracts, shareholder agreements, partnership agreements, plus many others – enables you to document the required outcome for almost all eventualities and on many occasions, removes the need for a long and protracted legal battle that can be bitter and extremely expensive.

Put another way, in marriage couples take a vow to remain together forever however many marriages end in an expensive divorce; in business, there are no ‘vows’ so why should business partners be any different?

Consider the following business scenarios:

  • Directors argue over whether to invest in new equipment or technology
  • One Director is putting in less effort than others, taking lots off time off work yet still wants their equal share of assets
  • A Director intends to bring a family member into the firm against the recommendations of other directors
  • One-half of the partnership wants to sell part of the business; the other wants to invest

Business disagreements can flare up over many issues, and even the most placid of people can become surprisingly litigious if they can’t see a solution to a problem. If you decide to settle your differences in court, there are no certainties regarding the outcome; however, you can almost be sure that:

  • A protracted disagreement will be expensive, often running into tens if not hundreds of thousands of pounds in legal fees
  • It will be stressful
  • It may cause irreparable damage to your business as well as your personal life
  • You may not get the outcome you desire

So, what can be done?

Our advice is simple; avoid spending thousands in legal fees by investing a few hundred pounds in drafting the correct agreements up front.

That way, if a disagreement does arise, you can prevent legal problems and refer to the document and implement the stated outcome based on the issue you are facing.

Not only will it save you money, but it will also give you peace of mind that if your business partnership breaks down, there are clear guidelines on what the outcomes will be.

To arrange a meeting with our Company and Commercial Law team, contact 01792 450010 or email [email protected]