When you form a business partnership with one or more partners, you anticipate being able to work with those partners to build a successful business for years to come. However, business partnership disputes arise in some cases, and the business relationship becomes strained. For instance, you may have differing views about the company’s direction or fundamental decisions about the company’s potential expansion. An Arizona commercial litigation attorney at Provident Law® can help in this situation.
We have years of experience advising partnerships and other business entities on day-to-day legal matters and legal options when businesses encounter internal and external challenges. We can assist your business in navigating business partnership disputes and working to reach the most beneficial resolution for all parties involved.
Can My Partner Push Me Out of Our Business?
In most cases, your partner cannot force you out of a partnership or other business entity without your express consent. However, depending on the terms of your partnership agreement, there may be circumstances in which you can be involuntarily removed as a partner. Typically, these situations occur if a partner has violated the law and the terms outlined in the partnership agreement. Nonetheless, your partner may persuade you to leave the business according to the terms of your partnership agreement, such as if the agreement contains a buy-out provision.
Can I Push My Partner Out of Our Business?
The reverse scenario is also typically true. Just as your partner generally cannot force you out of the business, you generally cannot force your partner out of the business, absent illegal behavior by your partner. However, you can strongly encourage your partner to leave the business.
Are There Any Other Ways to Involuntarily Break Up a Business Partnership?
Whether and how you can break up your business partnership involuntarily depends largely on your business structure and the provisions in your internal governance documents. Aside from a partner who engages in illegal activity, you may be able to remove a business partner when:
- Your business is a limited liability company (LLC), and your operating agreement has specific provisions that allow you to remove a partner involuntarily under some circumstances;
- Your business is a partnership, and your partnership agreement has specific provisions that allow you to remove a partner involuntarily under some circumstances;
- Your business is a corporation, and the majority interest holders vote to remove the partner;
- All partners agree to dissolve the business.
In many cases, a buy-sell agreement can provide a way out for a partner or even push a partner out under some circumstances. Including a buy-sell agreement in the original governing documents of the business entity, long before any business partnership disputes arise, can be critical to a smoother break-up of the business.
A buy-sell agreement is part of an operating agreement, partnership agreement, or corporation shareholders agreement designed to address issues that may arise unexpectedly or other disputes. Events such as incapacity, death, divorce, retirement, broken contracts, or bankruptcy can trigger these agreements. A buy-sell agreement outlines exactly what occurs if one of these events occurs. It also typically contains grounds for terminating the agreement, such as if a partner voluntarily wants to leave the business for another reason. For instance, if the partner disagrees with changes in the business or feels that the business is being poorly run, the buy-sell agreement may not apply.
If a qualifying event triggers the buy-sell agreement, and a partner refuses to comply with its terms, then the other partner(s) can file suit to enforce the terms of the agreement. A court is likely to enforce a legally valid buy-sell agreement if the court finds the triggering event(s) to have occurred.
Contact Us for Assistance with Your Business Partnership Disputes Today
The commercial litigation attorneys at Provident Law® have over 200 years of combined legal experience representing businesses in their daily legal issues and the unexpected business partnership disputes you may be facing. We are in the best position to help you efficiently and economically handle all commercial disputes. We aim to build a long-term relationship with you as we work together to proactively address and solve the most complex legal problems that your business may face. Contact a commercial litigation attorney today by calling (480) 388-3343 or reach out to us online to set up a time to see what we can do for you.