My business partner has been uncooperative in taking on additional expenses. We had a 50/50 agreement.

Question: A couple years ago, a Friend and I opened up a small online business together under general partnerships status. It was profitable the first two years and everything had been split 50/50. The past 3 months, each month we’ve been losing money and I have been bearing the expenses as he states he does not have money to dish out. We had verbally agreed prior to starting the business that if we lose money any of the months, we’ll split the expense 50/50. How do I go about resolving this business dispute?

Response:  A dispute between business partners can lead to dissolution if a timely resolution is not reached.   Although most business agreements should provide terms that control such disputes, sometimes partners neglect to incorporate those provisions.  It is particularly tricky when the agreement is oral.  Although most states recognize oral agreements, the aggrieved party has the burden of proving that a breach has occurred.  This is usually done through corroborating evidence.  Settling disputes with a business partner may entail third-party intervention either through arbitration or mediation.   This may be a preferable alternative to actual litigation, especially in cases of small businesses.  Mediation allows parties to resolve their issues without a lot of legal contention.  Egos are assuaged and the business ultimately can outlive the dispute.  However, sometimes disputes reach a point where mediation is inadequate.  In these cases, parties should consult attorneys experienced in litigating business partner disputes.

Business laws vary from state to state, so be sure to determine which laws control if you have not this provision is not in your contract, especially since your business is online.  To find mediation or litigation attorneys, you can consult the Small Business Administration which provides an Office of Advocacy that handles small business disputes.  Also Business.gov provides information on various business matters.

Additional Resources:

• Small Business Administration - Laws and Regulations
• Business.gov

Answered by Sharon Cullars

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