Business partnerships, like all other types of relationships, may be difficult. And, like any other connection, business ties come to an end. It is in everyone’s best interest for one or more partners to end their business agreement peacefully. If one partner attempts to evict another, they must follow the procedures outlined in the partnership agreement. Partners must follow state and federal rules when terminating their partnership without such a contract. In such a scenario, talking to a Tampa business attorney and getting the best legal advice is important.
What is a business partnership?
A business partnership is a legal relationship that establishes a company’s ownership. One or more partners own the business and share in its earnings and losses in a business partnership. Business partnerships, unlike corporations, are not independent entities from their proprietors.
Partnerships must typically register with the state in which they conduct business. Typically, business partnerships are formed and controlled by a written agreement. Such operating agreements may include the following clauses:
- The resolution of conflicts between partners
- The distribution of profits and losses
- The management of the partnership
- The procedure for one partner to exit the partnership
- Asset distribution upon dissolution
- The dissolution of the partnership
“Can my business partner force me out?” you might be asking. The operating agreement should resolve whether your company partner can drive you out of the partnership.
Can your business partner push you out?
If you or your business partner desire to dissolve your company, or if your business partner is attempting to force you out, you are probably concerned about the applicable rules and repercussions. First, review your company’s operating agreement. The agreement should include measures for settling disagreements between the parties. A buyout provision is one such provision that is popular in operating agreements. Buyout provisions allow the partners to sell their ownership stake in the company. Under certain conditions, such rules allow partners to buy out other partners.
Without a formal agreement, state law governs and provides remedies. In most circumstances, a partner can only push out another partner if the partnership agreement or federal or state laws are violated. Even if you did not break the agreement or behave illegally, you may be pushed out of the partnership if a court rules that it should be dissolved.
If your business partner successfully forces you out of the partnership, you may be entitled to earnings and the opportunity to inspect the business’s books and records. To learn more, speak to an experienced attorney today.