What can I do if my old business partner refuses to keep me informed of the sale of our business?

He is essentially trying to cut me out and keep the profit from the sale of the business to himself. We both founded and operated a food truck downtown. We both signed an agreement giving each other 50% of the bussiness and clearly stating that the business should not be sold with out consent from the other partner. This agreement was submitted to the state upon forming the partnership. The agreement was also needed to open a business bank account which was closed with out my knowledge. I’m not sure what my first step to solving this issue should be.

Asked on November 5, 2014 under Business Law, Rhode Island

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

Your partner may not legally do this for two reasons:

1) the terms of your agreement, stating that consent is required for sale--such an agreement, or contract, is enforceable; and

2) business partners owe each other a "fiduciary duty" under the law--a duty to act in the interests of each other.

Your first step in resolving the issue is to retain an attorney with business litigation experience, who can send a letter to your partner setting out your partner's obligations. If you partner does not then honor his obligations, the attorney can file a lawsuit against him to force him to do so and/or to get compensatgion from him.


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