Business relationships are complex, and at times, strain or pressure may result in the need to dissolve a company, partnership, or other business-related endeavors. However, since companies are legal entities, terminating a partnership can sometimes be complicated and may even involve the courts.
With that being said, the necessary steps to take when disbanding a business partner include the following:
Whenever you become involved in a professional business relationship, you generally sign a partnership agreement with the other party. In many cases, these legally-binding documents contain provisions and directives for removing a partner.
Before you proceed with legal action, you’ll need to review your contract and determine whether there are any procedures you must follow or conditions you need to meet. If business dealings go sour, your agreement might already lay out specific instructions designed to avoid complicated legal battles.
Consult with a Business Law Attorney
Business partnerships can be fragile and often have a lot on the line. As such, whenever you decide to remove a business partner, it’s wise to first consult with an experienced business law attorney.
Attorneys that specialize in business law are well-versed in the process of removing partners. They will review any contracts in place and advise you on your rights, duties, and obligations under the law. Depending on your unique circumstances, your attorney may simply draft a notice outlining the reasons for your partner’s removal and serve your business partner accordingly.
Consider a Buyout Agreement
You can often terminate a business partnership through a buyout agreement, which is a legal contract that outlines the specific terms and conditions related to a partner’s departure from a company, while also generally involving a payment. Your attorney can work with the other party to negotiate the terms and attempt to settle before things get out of hand.
Good-faith negotiations can result in favorable results for you and your business partner, and buyouts can save you time and money while also helping you avoid a contentious legal process.
Pursue an Injunction
Some partnerships end due to a partner’s harmful activities to the business: Sadly, some partners engage in illegal acts, disclose confidential information, or misappropriate company assets.
One alternative to resolve these issues is to seek a legal injunction through a judge. Injunctions are court orders that direct individuals or entities to cease their engaging in certain activities. Often, an injunction can provide relief and end unwanted business behaviors.
Go Through Mediation
Some business disagreements are often resolved through neutral third parties called mediators. Mediation is a form of alternative conflict resolution that helps parties find a mutual agreement and settlement. Only some situations are suited for mediation, however, so your attorney will review your particular case to determine the best course of action.
File a Lawsuit
A lawsuit may be your best recourse when you’ve exhausted all other attempts to remove a partner. Your attorney will determine the best path for successful litigation in your favor. Depending on the reasons for removing the partner, you may need to procure evidence to support your claim.
Typical evidence in a partner-removal lawsuit includes:
- Contracts and legal agreements
- Emails and text messages
- Witness statements
- Financial records
- Photos and videos
When removing a partner, a lawsuit is generally considered to be a final option. Typically, your attorney will work diligently to resolve the matter through less litigious means.
Finalize the Dissolution
Regardless of the route you take, the most crucial step in removing a business partner is legally finalizing the separation. Your attorney can advise you on the legal protocols that will ensure your business partner is absolved of all duties and responsibilities.
Dealing with Business Partner Removal in Providence, RI
At the Law Offices of William M. Kolb, LLC, our experienced business law attorneys work with clients throughout Rhode Island. Contact our office to schedule a consultation if you’re thinking about removing a business partner.