Principal Attorney
Business partnerships often start with trust and shared goals. However, as businesses evolve, so do the relationships between partners. Sometimes, a partner may find themselves facing an uncomfortable question: Can I be forced out of my own business partnership?
The short answer is yes, under certain circumstances—but it’s not as simple as just being “voted out.” In Texas, your rights largely depend on the partnership agreement, the circumstances of the dispute, and applicable business laws. If you are facing the possibility of being removed from a partnership, keep reading this blog from Sul Lee Law Firm to understand your rights and legal options.
What Determines Whether You Can Be Forced Out?
Several key factors influence whether a business partner can be forced out:
The Partnership Agreement
Most partnerships operate under a written partnership agreement or an operating agreement (for LLCs). These documents often contain provisions that address:
- When and how a partner can be expelled
- Grounds for forced removal (e.g., misconduct, breach of duties, insolvency)
- Buyout procedures and valuation methods
- Voting requirements for expulsion
If your partnership agreement contains a forced removal clause, and the proper procedures are followed, you could legally be expelled.
If there is no written agreement, Texas’s default partnership laws under the Texas Business Organizations Code (TBOC) will apply, and they often make expelling a partner much more complicated.
State Law
Under the TBOC, partners generally cannot be expelled without cause unless the partnership agreement says otherwise. Partners have fiduciary duties to each other and to the business, and removing a partner without legal justification can lead to lawsuits for breach of fiduciary duty, wrongful expulsion, or other claims.
Grounds recognized under Texas law for dissociation (separation from the partnership) may include:
- Wrongful conduct that materially affects the business
- Persistent breach of the partnership agreement
- Engaging in unlawful business practices
- Judicial order (court intervention)
Conduct of the Partner
Suppose a partner has engaged in misconduct, such as embezzlement, fraud, breaches of fiduciary duty, or other harmful behaviors. In that case, other partners may have legitimate grounds to seek removal through judicial action or mechanisms built into the partnership agreement.
How a Partner Might Be Forced Out
If the partnership agreement allows expulsion, the process typically includes:
- Providing formal notice
- Allowing the partner an opportunity to cure any breach
- Voting requirements being met (such as unanimous consent or majority vote)
- A buyout of the expelled partner’s ownership interest according to agreed-upon valuation methods
Without a clear contractual basis for removal, the remaining partners may need to petition the court for a judicial dissolution or expulsion, which is a time-consuming and expensive process.
What Are Your Rights if You’re Being Forced Out?
If you find yourself facing expulsion from a business partnership, you have important rights, including:
- Right to Due Process: You are entitled to notice and, often, an opportunity to defend yourself before being expelled.
- Right to Buyout Payment: If you are expelled, you may be entitled to the fair market value of your ownership interest.
- Right to Challenge: If your expulsion was wrongful or violated the partnership agreement, you can challenge it in court.
- Right to Accounting: You can request a full accounting of the business’s finances to ensure your buyout amount is fair.
Judicial Expulsion in Texas
In situations where no contractual process exists, partners may pursue judicial expulsion under Texas law. A court may order a partner’s removal if:
- The partner engages in wrongful conduct that adversely impacts the partnership
- The partner’s actions make it impractical for the business to continue with them involved
- The partner materially breaches the partnership agreement or their fiduciary duties
If the court grants judicial expulsion, the expelled partner is usually entitled to the value of their interest at the time of expulsion.
How Sul Lee Law Firm Can Help
At Sul Lee Law Firm, we understand that partnership disputes are deeply personal and complex. If you are facing a potential expulsion—or if you believe a partner’s actions warrant removal—we can help by:
- Analyzing your partnership agreement and rights
- Advising you on legal grounds for expulsion or defense
- Negotiating a resolution or buyout
- Representing you in partnership litigation if necessary
Our team works to protect your financial interests while minimizing damage to your business’s reputation and operations.
Protect Your Future
Business partnerships don’t always last forever. If you believe you are being wrongfully pushed out—or if you need to remove a problematic partner—experienced legal guidance is crucial.
Contact Sul Lee Law Firm today to schedule a consultation and learn more about your rights and options under Texas law.