I started a partnership with a colleague and later filed for an LLC, can she legally stop me from starting my own business and restrict my range of business?

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I started a partnership with a colleague and later filed for an LLC, can she legally stop me from starting my own business and restrict my range of business?

Along the way we experienced conflicts regarding the direction of the company and I have currently decided to relinquish my duties with the company and restart a new company while she continues the LLC. However, she wants me to sign a contract banning me from competing in the same area for a fixed term due to me having learned all of the LLC’s current model and ideas. The business is an online delivery service, that is still in the stages of development. Neither of us signed any agreements such as an operating agreement nor an NDA.

Asked on May 17, 2014 under Business Law, Texas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 7 years ago | Contributor

If there are no agreements restricting the parties' respective abilities to found a new business and/or compete, then you should not be prevented or restricted from starting your own business and competing--unless, that is, you sign the agreement. You could experience an issue if you use any assets of the LLC--e.g. any software, reference material, or equipment purchased for the LLC. However, if you do not use anything belonging to the LLC, she would, based on what you write, appear to not have any grounds to stop you.


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