It might seem counter-intuitive but when you’re thrashing out an agreement with a new business partner, it is always a good idea to start with the end in mind. It doesn’t matter whether it’s a long-term general partnership, a joint venture or a contracting arrangement; you need to consider how you will deal with conflict or the premature ending of that relationship. 
You might be asking yourself: “Why on earth would I do that? It’s a beginning; it should be full of hope, goodwill and good intentions. Why would I want to start talking about what’s going to happen if things go wrong?” Because it’s precisely that goodwill and good intentions that will help you to come to a fair arrangement to deal with the many ‘what if’s’ that can de-rail a beautiful partnership. The first step in reducing the potential for conflict to set down your agreement in writing – this negates a great deal of misunderstanding and those ‘I said/you said’ arguments. A written agreement provides clear ground rules for the roles and expectations of the partners and how each party should behave. This agreement should include provisions that outline what will happen if things go wrong, specifically how conflict will be resolved, and how and why the agreement can be terminated.
Let’s look at conflict resolution first
There are a few different ways to resolve conflict, and the path you choose will depend on the nature of the relationship with the other person. For example, the way two long-term partners deal with conflict is likely to be very different to the way a consultant solves a dispute over payment. Conflict can be resolved by:
- Mediation – mediator appointed to help both parties reach a resolution;
- Arbitration – an impartial person is appointed who will hear both sides of the dispute and then make a decision. The decision can be binding or non-binding;
- Concilliation – similar to mediation, but the impartial third party will offer advice or suggest the resolution;
- Expert determination – appointing an expert in the subject matter of the dispute, to issue a final and binding determination on the matter.
If no solution is reached after the preferred method of dispute resolution then the parties have the option of instigating legal proceedings unless they specify that the resolution method is binding.
What about Termination of the relationship?
Ending a business relationship requires time and thought because the nature or structure of the business partnership (company, sole trader partnership, etc.) will inform your exit strategy. You also need to be clear on the purpose of the partnership and what each partner hopes to gain from the collaboration. With these things in mind, use your imagination and brainstorm the scenarios in which it is likely one or both parties would want to terminate the arrangement. Consider issues like:
- Non-performance;
- Financial troubles;
- Death or illness;
- Conflict of interest;
- Fraud and dishonesty;
- Breach of contract;
- Retirement; or
- If one party wants to sell.
If you can forsee how certain events may affect the stability of your partnership, then you can set out a resolution process in your agreement. Remember, it’s much easier to work with the other party when everyone is optimistic and looking forward rather than in an atmosphere of dispute. If the wheels fall off down the road, then your written agreement should keep you out of court and provide the guiding light to a proper resolution. You will save yourself an enormous amount of stress and time spent trying to resolve conflict if you provide yourself with a sensible exit strategy. And I guarantee that if the time comes when you need to refer to it, you will be forever grateful that it exists in your agreement. I know I was.
