Can a partner make me pay them to buy out of a buisness?

I own a business and agreed with someone that I would make them a 50/50 partner. The person has not kept their end of the agreement, managing the books and business account. Now the person says that I can get rid of them if I buy them out of the business. Is this legal and what can I do? This person has not kept their end of the agreement

Asked on September 13, 2017 under Business Law, Michigan


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

You cannot remove a fellow owner of a business against his  or her will--even if they are not pulling their weight--unless you had a written agreement (e.g. a partnership or operating agreement) with them that gave you the right to remove them under certain circumstances; if you had such an agreement, then so long as you comply with its terms, you can take them out of the business. But with such an agreement, you cannot make them give up something they own--their share of the business. Rarther, they would need to give it up voluntarily, which means you'd need to get them to agree to be bought out--which in turn means negotiating a buy out with them that you *both* agree to.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.