Before entering into a partnership, you should know what your rights are, in order to prevent legal and financial issues. Ideally, you should have a written contract that sets forth how the partners will resolve conflicts and disagreements, and how a partner withdraws from the business. When there is no contract, or when important information is not within the contract, state and federal laws determine the rules.
Sell your stake in the business
Generally, you do not need the permission of your business partner to sell your stake in the business, because the person who buys your share does not become a partner. The buyer only receives the financial aspect of the business by which they can earn a profit or a loss based on how the business goes.
However, the law allows you to include terms within your partnership contract that require a business partner to offer their share to fellow partners before offering it to a third-party, or to obtain the fellow partner’s permission before selling their share. You must check your contract and make sure you follow the rules in selling your share, as these rules usually override the general law.
Adding any new partners requires your permission
The law protects business partners from new partners without their consent. If your partner wants to add a new partner to the business, they can only do so with your approval. If you are having a conflict with your business partner over whether or not to add someone, you might want to consult with a lawyer who has experience in partnership agreements and disputes.
Right to withdraw
You have the right to disassociate from a partnership at any time, but there is a legal process to do so. If you are withdrawing from the partnership, you may have to make sure the business is re-registered in order to remove your name from the partnership. A lawyer may assist you in following the correct procedure to withdraw from the partnership. If someone else is leaving your partnership, you should also make sure they complete the process correctly to avoid legal headaches for everyone involved in the future.
A partnership contract often dictates how you handle disputes, withdrawal and dissolution. Otherwise, the law in your state will determine what you can and cannot do in the partnership.
