My Business Partner Is Making Decisions Without Me. What Do I Do?

Business relationships are complicated. They require people with different personalities and motivations to work together to achieve their business goals. 

Sometimes partners can keep their differences aside and work together for the sake of business. Often, it becomes difficult for the business partners to get over their disagreements, and their relationship must end. 

Partners subject to a partnership agreement must follow its terms when ending their business relationship. Without a written partnership agreement, provincial and federal law governs the terms of the partnership. In Ontario, for example, the Partnership Act, 1990 determines many rights and obligations of the partners.

Business relationships that dissolve due to conflicts between their partners can be messy. A common example is when one partner tries to force one or more other partners out of the business. 

Can my business partner making decisions without me? Can one business partner push other partners out of the partnership? Can the other partners take any action against the partner pushing them out? When should you talk to a commercial litigation lawyer to help you assert your rights?

This article will answer all those questions and explain how a commercial litigation lawyer can help.

Can Your Business Partner Push You Out?

Legally, a partner cannot push another partner out unless there is a specific provision in the partnership agreement providing a legal basis to do so. However, they can always encourage the other partner to leave, such as by offering to buy the other partner out of business. 

Whether a partner can buy out another depends on their partnership agreement’s terms and other governing laws, such as the Partnership Act in Ontario. 

For instance, a buyout clause in a partnership agreement allows a business partner to buy another partner’s share of the business. Partners can potentially also expel other partners legally from the business for violating the terms of the partnership agreement. 

However, the partner who wants to take over the business is usually not concerned about the legality of their actions. They might just lock others out of business through actions like:

• Preventing access to the partnership’s bank accounts or financial records; 
• Removing access to access to the company’s website; 
• Refusing to communicate with a partner; or
• Changing the business’ locks and passwords to prevent any access to the business. 

A business partner being locked out usually prevents them from further involvement or control over the business. This can leave a partner in the dark about what is happening and cause significant harm to a business. 

What To Do About Your Business Partner Pushing You Out

If your partner is pushing you out of the business, you should check your partnership agreement to see if it contains a dispute resolution clause. 

Dispute resolution clauses require disagreements and legal disputes between partners to be resolved by mechanisms other than court. Examples include arbitration, mediation, or even simple negotiation. 

Depending on the language of such a clause, you might not be able to bring a civil claim in court. You may have to sue your partner in civil court if there is no dispute resolution clause or the clause does not restrict you from doing so. 

When your partner locks you out of control over the business contrary to your partnership agreement, you may sue them for breach of contract. 

Partners also owe fiduciary duties to each other and the business. If one partner locks another out from the business, it might be considered a breach of that duty, depending on the facts. This is separate from a legal claim from the breach of a partnership agreement but is another legal ground to seek remedy. 

Some examples of breaches of fiduciary duty between partners in a lockout situation can include: 

• Removing access to the business’s financial records;
• Removing access to the business’ bank accounts;
• Lying about business finances like profits and losses; and
• Barring participation in business decision-making.

In such a case, you may sue them for breach of fiduciary duty and breach of the partnership agreement. If successful, you may be entitled to damages due to your business partner’s actions or other remedies.

Some examples of what a court may order besides damages to remedy a partner pushing you out of the business include:

• Granting you access to your business; 
• Ordering a buy-out of your interest in the partnership; or
• Dissolving the partnership. 

How A Commercial Litigation Lawyer Can Help

Commercial litigation lawyers have the knowledge and skills to help resolve your partnership disputes. They can review the partnership agreement, evaluate your situation, and advise on the next best steps. 

A commercial litigation lawyer can also help guide you through the dispute resolution process and assert your rights with your best foot forward. Even if you are going through mediation or arbitration, a lawyer can represent you, help you prepare, and get the most out of the process.  

A typical lawsuit involves different steps such as the exchange of pleadings, mandatory mediation, examinations for discovery, a pre-trial conference, and a trial. Commercial litigation can get complicated with all the rules of the process, and deadlines that must be met. 

A commercial litigation lawyer can help you at each stage of the lawsuit to ensure you avoid fatal mistakes that could hurt your case and make every possible argument to maximize your chances of success. 

Conclusion

You should fight back if your business partner tries to push you out of business. There are different ways to resolve being pushed out of a business, but you should not delay. A dispute resolution process might be available to you, or you can sue in court for a remedy that makes the most sense for your unique circumstances. 

Each case is different, so it is best to gather all your documents and seek a consultation with a commercial litigation lawyer as soon as possible to determine the best next steps. Depending on what is at stake, hiring a lawyer to assist with your case can be a cost-effective way to maximize your chances of success. 

Contact Us

If your partner is pushing you out of a business and you want to know more about your rights, our commercial litigation lawyers at Achkar Law can help.

Contact us by phone toll-free at +1 (800) 771-7882 or email us at [email protected], and we will be happy to assist.

Related Reading

• What To Do If A Business Partner Competes With The Partnership
• Opposing Partners In Partnerships: Partnership Disputes In Ontario
• What To Do If Your Business Partner Steals From The Business

 

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