Schexnaydre Law Firm, LLC

Resolving disputes between business partners

Partnerships are a common way to join forces to create a business, especially in the oil and gas industry. There is no formal paperwork to be filed as there is a limited liability corporation (LLC). This makes them very attractive in the fast-moving field of drilling and field development.

Whether you have a general, limited, or joint venture partnership there is always the possibility of a dispute arising. The lack of formality, often the main draw of this kind of business, can suddenly become a problem. Here is a quick guide to resolving disputes among partners.

Kinds of disputes

There are two main kinds of disagreements between partners, regardless of what business they are in. These are:

  • Disagreements over money - how much needs to be invested, how much each partner can take out, or how tax benefits can be distributed
  • Disagreements over operations - how the partnership should proceed, who isn't doing their job, how it should conduct business.

Both of these can carry a lot of emotions. A business partnership might feel like a marriage at times, given that two once independent people are now tied to each other and work closely together. When a disagreement arises, regardless of the type, it can put everything at a standstill until it is resolved.

Go back to the partnership agreement

All partnerships should have an agreement in place which includes dispute resolution. It's surprising how rare this is, however.

The best time to write this agreement is when the partnership is formed. If you are already in the middle of a dispute over either money or operations and you don't have such a clause in your agreement, it's still a good time to work through it.

This may be counter-intuitive, but sitting down and working through the process can be a good way of getting past the emotions and ideas which created the disagreement in the first place. Nothing builds a partnership like shared work. If everything else is at a standstill, working through how you will decide disputes can give you a feeling of accomplishment together.

Obtain sound advice

A solid partnership agreement needs to be developed along with an experienced attorney. In the oil and gas industry, it is important to be industry specific as well. There are many good examples of partnership agreements with solid dispute resolution methods built into them.

The ease of formation makes a business partnership desirable, but that can also lead to a quick break-up if it's not done properly. A little time spent on the agreement, particularly the dispute resolution field, can make all the difference between a successful partnership that rides out the bad times and one that falls by the wayside.

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Schexnaydre Law Firm, LLC
2895 Highway 190, Suite 212
Mandeville, LA 70471

Toll Free: 888-339-0696
Phone: 985-231-1791
Fax: 985-235-1089
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