Contractual Alternatives for Resolving Corporate Deadlocks


Modern business dynamics, marked by constant changes and challenges, require not only a sharp strategic vision but also a solid contractual structure among partners, capable of foreseeing and resolving potential deadlocks efficiently. Besides the well-known “buy or sell” (shotgun) clause, there are several other contractual tools designed to prevent and solve conflicts among partners, each with its peculiarities, advantages, and application contexts. Exploring these alternatives is essential for maintaining corporate harmony and the long-term sustainability of the business.

Arbitration Clause

Frequently adopted in corporate agreements, the arbitration clause establishes that any dispute arising from the contract will be resolved through arbitration, not by judicial courts. Arbitration is a faster, confidential process that allows the parties to choose arbitrators specialized in the company’s field of activity, contributing to more informed and appropriate decisions in the business context.

Right of First Refusal

This clause guarantees partners the right to acquire the shares or quotas of a partner who wishes to sell them before they are offered to third parties. The goal is to protect the remaining partners against the unwanted entry of new partners and maintain control of the corporate composition.

Tag Along and Drag Along

“Tag along” is a right that protects minority partners, ensuring that, in the case of the sale of a majority partner’s stake, the minorities may sell their stakes under the same conditions (price and terms). “Drag along” is a right of majority partners to compel the minorities to sell their stakes under the same conditions of a purchase offer that the majorities are willing to accept. Both clauses seek to balance interests and provide a fair exit for all partners in the event of the company’s sale.

Lock-Up Period

This clause stipulates a period during which partners cannot sell their shares or quotas of the company. The goal is to ensure stability and commitment from everyone to the development and growth of the business in its early stages or during critical periods.

Deadlock Resolution Mechanisms

In situations of decision-making deadlock, where partners hold equal stakes and cannot reach an agreement, specific deadlock mechanisms can be provided, such as appointing a neutral third party for decision-making or convening an extraordinary assembly with weighted or qualified voting.


Choosing the most appropriate contractual clauses for inclusion in partnership agreements depends on the nature of the business, the relationships among the partners, and the long-term goals of the partnership. A well-structured and thought-out contractual configuration not only provides a clear roadmap for conflict resolution but also reinforces legal security and mutual trust, crucial elements for business success.


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