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CONFLICT RESOLUTION IN BUSINESS

When a business is operated by a single owner/manager, the single owner/manager makes decisions and dispute resolution mechanisms are not needed. 

  However, when a business has more than one owner or manager, partnership disputes can arise regarding the operation and proposed actions of a business entity. With such business problems there are a limited number of resolution possibilities for the parties. 

  The first and best option is for the disagreeing parties to communicate and attempt to work out an agreement that will be acceptable to all parties. Life and business are often a series of compromises and acceptances of what is possible not what is always most desirable under the circumstances. Learning to work as a team and avoiding controversies where possible can lead to a more positive environment where the business and its personnel can thrive. However, ultimately under Florida law in the absence of an operating agreement to the contrary or the taking of an illegal act, 51% of the ownership of a business entity has the right to control its actions. If the ownership is 50-50 or by thirds or some other combination, then accommodation may be necessary to avoid deadlock. 

  A second option available if there can be no agreement among the parties is to consider a buyout where one party buys out the other party’s stock or position. This in itself creates a new set of potential controversies including who will stay with the business and what is a fair valuation for the other party’s ownership interest. 

  A third option would be sale of the business to a third party, splitting the proceeds on the basis of ownership interests or other operating agreement provisions. Again, issues can arise as to who should be allowed to purchase the entity and at what price. The issues of how the proceeds are to be distributed are further governed by Florida Statute 605.0710 and 607.1405. 

  The last option when business owners/managers cannot agree and there is no resolution mechanism is to resort to the courts. Here, there are established causes of action that may be brought including a shareholder’s derivative suit, action to see the books and records of the company, claims for breaches of contract or fiduciary duty, and actions for dissolution and injunction. 

  Here again the rights and remedies which are available regarding a business involve specific facts of ownership and operation as well as Florida Statutes and case law which will ultimately be decided by a judge and/or jury. 

  Business owners and operators are well advised to discuss such potential resolutions and litigation possibilities and risks with an experienced practitioner before proceeding forward.

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