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What types of business disputes can arise from partnerships?

Going into business with a good friend or relative may seem like a great idea to some New Jersey readers of this business law blog. Working side by side with a trusted associate may appear to be a risk-free way to start a new enterprise or expand an existing business. For many individuals who choose to enter into business ventures with other people, partnerships form the legal bases of their business relationships.

Some business partnerships are general partnerships, and these types of partnerships spread the liability for the businesses debts out among those listed as partners. While this may seem like a fair way for partners to share responsibility of a business, it can create conflicts between them if one of the partners causes the business to incur debts that the other partner then becomes liable to pay.

The failure of partners to adequately communicate about business decisions can also cause conflicts in business partnerships. The partners may not fully discuss who has decision-making powers over certain aspects of the business and clarity may be lacking with regard to which partner has the authority to bind the business to new obligations.

One of the best ways that partners can avoid these and other conflicts is to create a partnership agreement at the outset of their business venture. Though it may seem rather formal for family members or friends to write out their rights and expectations for each other with regard to their business, having an agreement that stipulates important partnership terms can save businesses and their owners a great deal of time and money.

Partnerships are common in business but they are not without their own challenges. When partners fail to share their expectations for the business and each other their businesses can suffer. At the outset of a new partnership venture, partners may wish to discuss their visions for the business and establish an agreement about how the partnership will operate to avoid business disputes.

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