Coupon Accepted Successfully!


Dispute resolution and conflicts

The co-founders must also specify within the agreement the method which is to be adopted if there are serious disputes or breakdown in the relationship between the founders which is not settled. This clause kicks in when all of the above clauses have failed.

For example, one of the co-founders has just been newly married and is unable to dedicate time to the business, or that he has relocated to another destination and is not working full-time for the business. However, he does not want to relinquish his economic interest and is claiming a disproportionate amount in the future revenues of the business. Or he wants to start a competing business. 

If the co-founder who could not devote adequate time to the business left peacefully and as per the terms of the agreement, there may be no dispute.  However, what if there is disagreement on these issues? What if a co-founder wants to start a competing business?

These disputes need to be resolved quickly and cheaply for the business to continue. One cannot let the possibility of approaching courts remaining open. An arbitration clause can be inserted for such situations. A sample arbitration clause is included in the Co-Founders Agreement template with this chapter. 

Test Your Skills Now!
Take a Quiz now
Reviewer Name