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How to resolve disputes between business owners

On Behalf of | Dec 1, 2021 | Business Litigation

Owning a business with someone else is not always easy. Inevitably, there are going to be disagreements, and some of them may turn into full-on disputes in which neither partner can agree on a solution.

There are numerous options to resolve a business dispute. Some of them are less contentious than others.

Decide the resolution process in the governing documents

Business partners can minimize conflict and prevent numerous problems early in the agreement. The National Law Review recommends outlining as many details as possible in the governing documents such as the operating and partnership agreements. Although these can prevent many disputes, they will probably not stop them all. However, the partnership agreement can outline how the partners would resolve disputes in the event they could not agree on their own.


The Harvard Law School Program on Negotiation discusses that mediation is one option for dispute resolution. In this method, a mediator is a neutral third party that works with both parties so they can come to an agreement. The mediator does not make any decisions and is there to offer creative solutions and assist with any conflicts.


Arbitration also involves a neutral third party called an arbitrator. Each side presents his or her own case to this individual, who acts as the judge. Based on the evidence and testimonies presented, the arbitrator hands down a binding decision.


Both mediation and arbitration are less expensive than litigation, and many business partners choose either of those routes first. However, if it is a serious dispute, and neither party wants to use those methods, litigation may be the option. This includes a judge, jury or both, who listens to the attorneys representing each party. Either the judge or the jury makes the ruling.