My Business Partner is Making Decisions Without Me, What Do I Do?

Trust and communication are the cornerstones of any successful business partnership. When one partner starts making decisions unilaterally, it can lead to financial losses, operational disruptions, and irreconcilable differences.

If you find yourself in a situation where your business partner is making decisions without your input or consent, it’s essential to take prompt action to protect your interests and the future of your company.

Know Your Rights: Decision-Making in Texas Partnerships

The first step in addressing the issue is to understand the legal framework of your partnership. In Texas, there are several types of business partnerships, each with its own default rules for decision-making and management:

• General partnerships: Unless otherwise agreed, all partners have equal rights in the management and control of the business.
• Limited partnerships: General partners typically have management authority, while limited partners do not participate in day-to-day decision-making.
• Limited liability companies (LLCs): Management structure and decision-making authority are determined by the company’s governing documents and the Texas Business Organizations Code.

Reviewing Your Partnership Agreement

If you have a written partnership agreement, review the document thoroughly. Look for clauses that specify how decisions are to be made, who has management authority, and how disputes are to be resolved. If your partner’s actions violate the terms of your agreement, you may have grounds for legal action.

Assess the Impact of Your Partner’s Decisions

Next, assess the impact of your partner’s unilateral decisions on your business. Consider the financial and operational consequences, as well as the effect on employees, customers, and other stakeholders. Document specific instances of unilateral decision-making and their impact, as this information may be valuable if you need to take legal action.

Gathering Evidence and Documentation

To build a strong case, gather relevant evidence and documentation, such as:

• Financial records and contracts related to the decisions
• Emails, text messages, or other correspondence discussing the decisions
• Notes from conversations or meetings where the decisions were made

Create a timeline of events to help you organize the information and present a clear picture of your partner’s actions.

Initiate a Conversation with Your Business Partner

Before escalating the situation, attempt to have a conversation with your business partner. Set up a meeting to discuss your concerns and approach the conversation with a collaborative mindset. Express how their unilateral decision-making has affected the business and listen to their perspective. Work together to find solutions and compromises, such as improving communication channels or updating your partnership agreement.

Proposing Solutions and Compromises

During your conversation, propose ways to improve joint decision-making and communication, such as:

• Scheduling regular meetings to discuss business decisions
• Establishing clear protocols for seeking input and approval from all partners
• Exploring mediation or other alternative dispute resolution methods

If your partner is receptive to these suggestions, work together to implement them and strengthen your partnership.

When Partnership Disputes Escalate: Litigation and Dissolution

In some cases, partnership disputes may require litigation to resolve. If your partner’s actions have caused significant harm to the business or your interests, you may need to file a lawsuit seeking injunctive relief or damages. In extreme cases, you may need to explore the possibility of partnership dissolution.

Dissolving a Partnership in Texas

Under Texas law, a partnership can be dissolved by judicial action on several grounds, including:

• A partner’s misconduct that prejudicially affects the business
• A partner’s persistent breach of the partnership agreement
• Circumstances that make it impracticable to continue the partnership

If you choose to pursue dissolution, you’ll need to follow the proper procedures for winding up the business, distributing assets and liabilities, and terminating the partnership.

Grounds for Suing a Business Partner in Texas

In Texas, there are several valid reasons for taking legal action against a business partner. Common grounds include:

• Breach of Partnership Agreement: If your partner violates the terms of the partnership agreement, such as failing to fulfill their responsibilities or making unauthorized decisions, you may have grounds to sue.
• Breach of Fiduciary Duty: Partners owe each other duties of loyalty, care, and good faith. If a partner acts in their own interest at the expense of the business or engages in misconduct, it can constitute a breach of fiduciary duty.
• Fraud or Misrepresentation: If your partner intentionally deceives you or misrepresents key information about the business, you can pursue legal action for fraud.
• Misappropriation of Funds: Misusing business funds for personal gain or without authorization is a serious violation that could lead to legal action.
• Negligence: If a partner’s carelessness or failure to meet their obligations harms the business, you may be able to sue for damages resulting from their negligence.
• Violation of Texas Business Organizations Code: Certain actions may violate state law, such as failing to uphold statutory duties or misusing authority within the business.

Before filing a lawsuit, review the partnership agreement and consult with our civil litigation attorneys to assess your specific situation and explore your options.

Don’t Let Partnership Disputes Jeopardize Your Business – Contact The Titus Law Firm Today

If your business partner is making decisions without your input or consent, it’s essential to act quickly to protect your rights and interests. The longer you wait, the more difficult it may be to resolve the issue and mitigate potential harm to your business.

At The Titus Law Firm, we’re here to help. Our experienced attorneys can guide you through partnership disputes and help you find the best path forward. Whether through negotiation, mediation, or litigation, we’ll work to achieve a favorable outcome for you and your business.

Don’t let partnership disputes jeopardize your hard work and success. Contact The Titus Law Firm today to schedule a consultation and take the first step toward resolving your partnership issues.