Who can legally make decisions for your company?
15.01.2018 Business Litigation
Making decisions is an essential aspect of conducting business, one which often involves input from multiple parties — particularly where business partnerships are concerned. As a result, the decision-making process is essentially a breeding ground for business disputes. Countering the potential issues that can be caused when decisions need to be made all comes down to planning in advance with help from a West Palm Beach business litigation attorney.
Determining Decision-Making Structure
Before business partners can begin to develop a process for making decisions, there are some considerations that must be made. First off, it is important to take into account what kind of business they share. For instance, if the company is a corporation or an LLC, majority vote is the standard for making determinations or resolving issues. On the other hand, general partnerships may allow for any owner to make the final call for business decisions, though ideally there would be a thorough partnership agreement in place with well-established boundaries. This brings us to our next consideration: the partnership agreement itself.
Before setting out to run a joint business, all partners should consult with a West Palm Beach business litigation attorney to analyze potential problem areas and draft a clear decision-making process. That process should account for any potential roadblocks that could lead to a dispute. For instance, in a 50/50 partnership, it is essential to determine how split decisions will be settled. Often, a business may elect to award the deciding vote to one partner over the other, or mandate that such issues be decided by a neutral third party who can be trusted to make an informed decision that is in the company’s best interest.
Additionally, the agreement should address how a range of decisions should be made, not simply offer a blanket decision-making process that may not be realistic for all situations. A majority vote may make sense for large resolutions, but it likely won’t be feasible for matters pertaining to day-to-day operations. Some businesses may opt to give one partner power to make daily decisions, while mandating that major decisions be voted on. For this reason, the agreement should clearly establish processes for deciding all kinds of matters.
Resolving Disputes Over Business Decisions
Even with careful planning, there is always the chance that partner disputes will arise regarding key business decisions. Therefore, business owners should be knowledgeable about how to resolve disputes in the best interest of the company. Ideally, the partnership agreement would also lay out a process for resolving disputes, such as pursuing mediation or even arbitration before proceeding to a formal lawsuit. This can keep potentially minor issues from dissolving the company, by allowing all parties to work through them in a less formal setting than a courtroom.
If mediation or arbitration are not suitable options for resolving the matter, one should consult with a West Palm Beach business litigation attorney to determine the best course of action. Depending on the circumstances, pursuing a lawsuit may or may not be the right choice. For example, under the Revised Uniform Partnership Act, a business partner in Florida may be lawfully permitted to make decisions which are deemed customary for that particular partnership, even in situations where the other might not agree. Knowing the ins and outs of business law is essential before moving forward with potentially costly litigation.
At Kelley Fulton Kaplan & Eller, we are committed to helping Florida businesses avoid business disputes, and fiercely representing their interests when disagreements do arise. If you have a case for our attorneys, call our office to schedule a consultation today.