Business Partner Disputes in Pennsylvania: What to Do When Co-Owners Cannot Agree

It’s a familiar story. Two friends come up with a brilliant business idea and decide to go into business together. Their friendship gives them the trust that they’ll see eye to eye on most things. But as the business grows and challenges arise, they realize their management styles, or their goals for the company, are vastly different and disagreements begin. 

For some, these disagreements escalate to the point where business operations are affected, and co-ownership is no longer possible. At One Oak Legal, our attorneys are entrepreneurs and business owners who know the joys and pitfalls of co-ownership, and we understand the challenges that can arise in operating a business together. If you’ve reached a point where working together is no longer possible, we can help you evaluate your options for resolving partner disputes. 

Start With the Documents

When you and your business partner established your company, you likely created organizational documents. Depending on the type of business you created, those documents may include, for example, an operating agreement, bylaws, or a partnership agreement. 

When one partner violates these business documents, they provide legal rights and options for the other partner to pursue. If the partners simply cannot reach a management agreement, these operating documents often provide a procedure for resolving such disagreements. 

If your business does not have these underlying documents, Pennsylvania law provides default rules governing how partners make decisions and handle disputes under statutes such as the Revised Uniform Partnership Act and the Limited Liability Company Act. At One Oak Legal, our experienced Pennsylvania business disputes attorneys can help you determine which rights and procedures may apply to your business disputes. 

Weighing Your Options

Depending on the nature of your business entity and your underlying documents, several options may be available to you. Your documents may provide dispute resolution procedures you must follow or a formula for one partner to buy out the other. 

If the procedures in your documents are not sufficient for resolving a disagreement, or one partner is refusing to act consistent with their obligations, you may choose to mediate the business dispute. Mediation is a form of negotiation where a neutral third party, the mediator, attempts to help the parties and their attorneys resolve business disputes without engaging in full litigation. Mediation can be cheaper and less stressful than filing a lawsuit.

When all else fails, litigation and forced dissolution of the business may be the only path forward. Dissolutions can be complicated and often raise many questions about what a business is worth, how it can be divided, and how to wind up the business’s activities without causing reputational harm. And where one party has acted in a way that hurts the business or another partner, litigation may be required to address these problems on the way to full dissolution.

Helping You Find a Path Forward

At One Oak Legal, our attorneys have decades of experience helping business partners navigate a wide range of business disputes. We help business owners work towards a resolution that minimizes harm to the overall business, while also being ready to fight aggressively for your partnership rights in the courtroom when necessary. For more information or to schedule a free consultation, contact us today.