Consulting on resolving business profit division disputes

Article overview

Profit division disputes in business are complex problems that can arise from many different causes and affect the operations and development of businesses. A thorough understanding of the causes, resolution methods, and measures to prevent disputes is necessary to ensure the interests of both parties and maintain a sustainable cooperative relationship. This article will provide customers with an overview of effectively resolving business profit division disputes.

Consulting on business profit division disputes
Consulting on business profit division disputes

Common causes leading to business profit division disputes

Business profit division disputes often stem from many causes, including both objective and subjective factors. Here are some of the most common causes:

  • Unclear business cooperation contract: Contract is the foundation of the cooperative relationship. If the contract lacks transparency, is not detailed, or does not specifically stipulate profit division, financial responsibilities, intellectual property rights,…, it will easily lead to disputes when they arise.
  • Differences in interests and business goals: Each party participating in cooperation has its own benefits and goals. When these interests conflict or are not similar, unifying strategies and development directions will be difficult, thereby leading to conflicts in the cooperation process.
  • Lack of trust and ineffective communication: Trust is an important factor in maintaining a cooperative relationship. Lack of trust, ineffective communication, and lack of transparency in operations will create distance between parties, causing misunderstandings, suspicions, and ultimately disputes.
  • Unfair financial management and profit sharing: Non-transparent financial management, lack of clear control mechanisms, or unfair profit sharing methods will make parties feel disadvantaged, leading to loss of trust and disputes.
  • Inappropriate changes in strategy or personnel: During the cooperation process, changes in business strategy or key personnel without consensus and careful discussion between the parties can also cause conflicts and disputes.
  • Legal risks and legal compliance issues: Failure to comply with legal regulations or lack of understanding of the law can lead to legal risks for both parties, creating conditions for disputes to arise.
  • Lack of dispute resolution mechanisms: Contracts that do not clearly stipulate dispute resolution mechanisms or lack dispute prevention measures will make it difficult for the parties to handle conflicts when they arise.

Methods of resolving business profit division disputes

When a profit division dispute arises, the parties can choose one of the following resolution methods:

Negotiate

  • This is the first method that the parties should apply. The parties will voluntarily negotiate and agree to find a reasonable solution and eliminate disputes without the intervention of a third party.
  • The advantages of this method are simple, fast, and cost-effective. However, the effectiveness of negotiation depends entirely on the goodwill of the parties.

Reconcile

  • The parties can choose commercial mediation if there is a previous agreement. The mediator is an intermediary who assists the parties in finding a satisfactory solution.
  • The advantages of mediation are that the procedure is quick, flexible, confidential, and maintains a cooperative relationship. However, like negotiation, the outcome of mediation depends on the willingness of the parties.

Through Arbitration

  • Commercial arbitration is a method of resolving disputes by one or a group of independent arbitrators.
  • The arbitration award is final and mandatory for the parties to implement.
  • The advantages of arbitration are professionalism, confidentiality, and flexible procedures. However, arbitration costs are often higher than negotiations and mediation.

>>> See more: Stages of litigation in the Commercial Arbitration process

Through the Court

  • The Court is the State’s judicial agency, with authority to resolve business profit division disputes.
  • The court’s ruling is binding and guaranteed by the power of the State.
  • The advantage of this method is to ensure objectivity and fairness. However, court procedures are often complicated, time-consuming and costly.
Negotiate and negotiate to resolve profit division disputes
Negotiate and negotiate to resolve profit division disputes

Measures to prevent disputes in business

Dispute prevention is the most effective measure to protect the interests of the parties and maintain a long-term cooperative relationship. Below are some preventive measures that customers should keep in mind:

  • Build a detailed and clear business cooperation contract: The contract needs to fully and specifically stipulate important contents such as scope of activities, rights and obligations of the parties, profit sharing, financial responsibilities, intellectual property rights, dispute resolution mechanism…
  • Maintain effective communication: Parties need to regularly exchange information, share business situations, and discuss issues that arise during cooperation.
  • Build trust and mutual respect: Transparency in operations, respect for partners’ opinions, and always being willing to cooperate to resolve arising issues are important factors in building trust, and maintaining long-term cooperative relationships.
  • Establish a transparent financial management mechanism: There should be clear, transparent financial management regulations agreed upon by all parties. Periodic financial inspection and supervision will help prevent financial risks and disputes related to profit division.
  • Strictly comply with legal regulations: Parties need to firmly understand and fully comply with legal regulations related to their business activities.
  • Proactively prevent risks and disputes: Parties should establish a project management board, control board, or hire consultants to help manage risks and handle problems arising during the cooperation process.

Long Phan’s effective business profit division dispute resolution consulting service

With a team of experienced and knowledgeable about business law, Long Phan provides professional and effective consulting services on resolving business profit sharing disputes, helping customers protect their legitimate rights and maintain sustainable cooperative relationships.

Benefits when using Long Phan’s services

  • Save time and costs: support customers in resolving disputes quickly and effectively, avoiding prolonging time and incurring additional costs.
  • Protecting legal rights: With professional knowledge and practical experience, we will advise and represent to protect customers’ legal rights throughout the dispute resolution process.
  • Maintaining a cooperative relationship: We always prioritize mediation and negotiation solutions to help the parties maintain a long-term cooperative relationship.
  • Prevent future risks: Based on experience handling real cases, we will provide advice and solutions to help customers prevent risks and disputes in the future.

Content of Long Phan’s dispute resolution consulting service

We provide dispute resolution consulting services as follows:

  • Consulting on the causes of disputes and appropriate resolution methods.
  • Draft, review, and negotiate business cooperation contracts.
  • Representing customers to negotiate and mediate with relevant parties.
  • Representing customers to participate in proceedings at Arbitration or Court.
  • Consulting on measures to prevent business profit division disputes.
  • Consulting and answering questions during the process of dispute resolution and business cooperation.
Consulting on plans to resolve profit division disputes
Consulting on plans to resolve profit division disputes

Business profit division disputes can cause serious consequences, affecting the operations and reputation of the business. To effectively prevent and resolve disputes, customers need to thoroughly learn about the causes, resolution methods as well as relevant regulations. Don’t hesitate to contact Long Phan via the hotline: 0906735386 for professional advice and support, helping customers protect their rights and develop sustainably.