The complete definition of a 50/50 partnership deadlock, and how to solve it

Starting a business is an arduous job. If you are considering running a business as a partnership or you are already operating one, you may be wondering what would occur at the time of a dispute. 50/50 partners not only have equal profits but equal weight in the arguments and decisions. A corporate dispute is frequently a painful and unpleasant situation. As a business conflict has a great possibility to occur it is an excellent idea to implement an effective and well-planned business dispute strategy, in case conflict happens, you can solve it quickly and avoid it scale. Read this Business Kitz blog to find out more.

What is a 50/50 partnership?

A 50/50 partnership is a contract between two or more business partners. Each partner has an equal share of the business’s profits and losses. Moreover, the contract specifies each partner’s responsibilities, general partnership rules, and profit and loss sharing among partners.

What is a 50/50 partnership deadlock?

Conflicts between 50/50 shareholders are a significant risk to the company’s success. However, the best way to prevent these conflicts is to act professionally and for the business’s best interests. A deadlock occurs when business partners are unable to resolve a conflict themselves. 

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How to resolve a deadlock?

In the case of a deadlock, the most common procedures to solve it are:

  • mediation, with multiple meeting business partners, can find a deadlock resolution process;
  • compromise being in several forms by business owners; and
  • in arbitration, the owners present a deadlock to an arbitrator (third party) to resolve a dispute effectively.

The previous options should be outlined in the business dispute strategy, under the dispute resolution clause. By following these procedures business partners would be able to resolve disputes quickly and effectively.

What are the most common resolutions?

The most typical method is one partner making a fair buy-out offer to the other. With this procedure, the partnership will end, but the company will continue operating, and the remaining partner will assume all liabilities as the sole owner as they possess 100% of the company. If you wish to dissolve your business partnership, the terms and conditions to end a partnership must be specified in the formal partnership agreement, as well as legal obligations. 

Legal advice

Regarding conflict situations, we suggest sitting and openly discussing with your business partner to resolve those disputes professionally. If you are considering a 50/50 partnership our team at Legal Kitz can assist you! Our sister company Legal Kitz can provide you with advice that is tailored to your situation. Click here to book a FREE 30-minute consultation.

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