How to Resolve Partnership Disputes Without Going to Court in Mississippi

Business partnership disputes don’t have to end up in court. In fact, that should be the last resort because litigation is expensive, time-consuming, and may threaten the stability of the business.

Most times, with the help of an experienced business litigation lawyer, mediators or arbitrators, these types of disputes can be resolved at less expense and with fewer delays using alternative dispute resolution methods.

If you’re involved in a partnership dispute over finances, contractual responsibilities, company direction or other matter in Mississippi, the following information could be invaluable in keeping your dispute out of court.

Business disputes can affect multiple parties, from solo professionals to large enterprises. The most common reasons for business disputes in Mississippi are:

A common form of business dispute in Mississippi is partnership or shareholder disagreements. These can revolve around issues such as the misuse of funds, salaries or investments, breach of fiduciary duty or disagreements over company strategy and direction.

Such disputes may arise in private, family-run businesses, limited companies, public companies or almost any organization that involves decision-making from multiple individuals.

Mississippi courts have the authority to enforce operating agreements, partnership agreements or shareholder bylaws, in some cases by applying common-law principles.

Breach of contract is also very common in Mississippi. This type of dispute occurs when one party fails to honor the terms of a business agreement. Breaches might include failing to deliver goods/materials, complete work as agreed, pay for services after work is completed or meet pre-agreed deadlines, for instance.

Common law applies to contractual disputes in Mississippi, with most contracts enforceable if they include an offer, acceptance, consideration, and clear terms. This means that the injured party may be able to sue for damages.

Unpaid invoices or slow payments can be another source of business disputes in Mississippi. After repeated requests to pay, businesses may decide to take legal action for the failure to pay for services rendered, returned checks, refused payment for disputed charges, etc.

Depending on the amounts under dispute, legal action can be filed in justice, county or circuit court within three years of the debt being incurred.

Fraud or misrepresentation in business deals is another major cause of business disputes. Fraud is when deceptive practices are employed to pave the way for a business deal, such as deliberately misrepresenting assets or liabilities, falsifying statements or concealing the purpose of the acquisition.

Proof of deception and fraud can prompt a judge to award punitive damages to the harmed party.

As mentioned, most business partnership disputes are settled out of court in Mississippi. However, it helps to understand the laws that may be used to resolve such disputes:

• Mississippi Code Annotated Title 75 and Title 79 (contracts, business organizations).
• Code Ann. § 15-1-49 (three-year statute of limitations for breach of contract).
• Mississippi Rules of Civil Procedure (how lawsuits are filed and litigated).
• Federal law (e.g., in fraud or multi-jurisdiction disputes).

The benefits of settling partnership disputes out of court are numerous.

For starters, resolving matters without a “winner” and “loser” can help protect the business relationship, which may be a valuable one. It is almost impossible for normal working relationships to continue during adversarial situations, like trials.

Court proceedings can often take many months or years to resolve. These delays can be expensive, running up high legal costs and court fees, and sometimes interrupting normal business operations (another cost). Litigation is more expensive than alternative dispute resolution methods, such as mediation.

Avoiding court also retains the confidentiality and privacy of the disputed matters, whereas court cases open them up to the public and can potentially damage reputations.

In court, a judge decides on the outcomes. With alternative dispute resolution methods, you may be able to remain in control of decision-making.

Finally, settling issues out of court means that matters may be resolved more creatively and informally, rather than relying simply on strict adherence to the legal frameworks and formal processes.

The following is a brief overview of the main alternative dispute resolution methods used instead of litigation for partnership disputes in Mississippi:

Mediation

During mediation, a trained, impartial mediator facilitates sessions that seek mutually acceptable solutions. Disputing partners may attend sessions alone or with legal counsel. The final decisions rest with the disputing parties rather than the mediator, and matters remain private.

Arbitration

With arbitration, a neutral arbitrator (who is usually familiar with the type of dispute in question) acts like a judge. Both sides present evidence during a hearing. Though less formal than a court trial, the process is structured and more formal than mediation. The arbitrator makes a legally binding decision at the end of the process, requiring both sides to comply.

Beyond the alternative dispute resolution methods outlined above, it helps disputing business partners to understand a few strategies that diminish the likelihood of conflict escalation and court proceedings.

Clear communication

The first tip is to maintain clear communication, as many misunderstandings happen when partners must “read between the lines”. To avoid conflict escalation, keep communication channels open and emotions in check, resist the “blame game”, and commit to resolving matters peacefully.

Refer to the partnership agreement

The partnership agreement is the foundation of the business relationship between partners, and you should refer to this document regularly. A well-drafted agreement should clearly outline the rights and responsibilities of each party—and how to resolve disputes. Sometimes, for instance, an arbitration clause is inserted to provide clarity on how to resolve any major disputes.

Spirit of negotiation and compromise

Try to foster a spirit of negotiation, compromise, fairness, and good faith rather than antipathy, conflict, and bad faith. If you’re willing to make concessions and be understanding, you could preserve a stable business relationship for the future while resulting in a win-win for both parties.

Try to think long-term with business partnership disputes. Is it worth going to court and potentially ruining the relationship if the matter can be settled out of court more amicably? Oftentimes, the answer is “no”, which should encourage working together for an agreeable solution.

If you need legal help with a partnership dispute anywhere in the Gulf Coast of Mississippi, contact a lawyer at Rushing & Guice, PLLC for legal advice and assistance.