Business relationships, like other kinds of relationships, can be complicated. And just like other relationships, business relationships sometimes come to an end. When one or multiple partners want to dissolve their business relationship, it is in their best interest to do so amicably.
If one partner is trying to force another partner out, they will have to follow procedures set forth in the partnership agreement to do so. In the absence of such an agreement, partners must nonetheless comply with state and federal laws when dissolving their partnership.
If you’re wondering–What do I do about my business partner trying to force me out?– then you are likely concerned about whether or not they can legally do so.
If an irreconcilable dispute arises between partners, one of the partners might take aggressive action to push out the other partner. When that happens, it might be necessary to push back.Business Disputes Attorney Michael Long
What Is a Business Partnership?
A business partnership is a legal relationship that forms the ownership of a business. In a business partnership, one or more partners own the business and share in the profits and losses. Unlike corporations, business partnerships are not separate entities from the individual owners.
Partnerships are usually required to register with the state in which they do business. Business partnerships are typically formed and governed by a written agreement. Operating agreements may cover the following:
- The management of the partnership;
- The distribution of profits and losses;
- The resolution of disputes between partners;
- The dissolution of the partnership;
- The distribution of assets upon dissolution; and
- The procedure for one partner to exit the partnership.
You may be wondering, Can my business partner push me out? Whether your business partner can force you out of the partnership is likely a question that can be answered by reading over the operating agreement.
Can My Business Partner Push Me Out?
If you or your business partner wants to dissolve your business, or your business partner is trying to force you out, you are likely concerned about the relevant rules and consequences. First, look over your business’s operating agreement. The agreement should contain provisions related to resolving disputes amongst the partners. One such provision common to operating agreements is a buyout provision. Buyout provisions allow the partners to decide to sell their ownership interest in the business. Such provisions also provide procedures for partners to buy out other partners under certain circumstances.
In the absence of a written agreement, state law provides rules and remedies. In most cases, a partner can force out another partner only for violating the partnership agreement or state or federal laws. If you didn’t violate the agreement or act illegally, you may nonetheless be forced out of the partnership if a court determines that the partnership should be dissolved.
If your business partner successfully pushes you out of your partnership, you may have the right to receive profits as well as the right to inspect the books and records of the business.
Will the Courts Get Involved?
If the dissolution of your partnership leads to a lawsuit, the courts will get involved. In order to petition the court for dissolution in Florida, a partner must show that the economic purpose of the partnership is likely to be unreasonably frustrated, another partner has engaged in conduct which makes it impractical to carry on the business in partnership, or it is not otherwise reasonably practicable to carry on the partnership business in conformity with the partnership agreement. If the court decides to dissolve the business, you will likely get a share of any profits from the sale or buyout.
My Business Partner Is Trying to Force Me Out; What Do I Do?
If you’re in a position where your business partner is trying to force you out, you should think about how to protect yourself.
The best way to protect yourself from being forced out of your business relationship is to include protective provisions in your partnership agreement. Consult with an experienced business law attorney to help you prepare a partnership agreement that suits the needs of your business. Your agreement will specify the rights and obligations of the partners and will detail the procedures for dissolution, buyout, and sale.
If your business partner is trying to or has forced you out, you have the right to receive compensation and the right to access business records. If your partners fail to provide either, you should first write a letter demanding that they do so. If the partners still fail to provide profits and/or access, you can file a claim in court.
Why Hire BrewerLong?
BrewerLong is a law firm that focuses on relationships. Our attorneys strive to provide approachable and sophisticated representation to businesses of all types and sizes. Whether you own your own business or you are part of a business partnership, we can help. Contact us today for a introductory phone call. One of our attorneys will talk through your case with you to find out whether we can provide you with legal services. We will do our best to represent you.