Can a partner make me pay them to buy out of a buisness?
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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
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 6 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.
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