What Is a Partnership Dispute in Texas?
Texas partnerships, including general partnerships, limited partnerships and limited liability partnerships, are governed by the partnership agreement and the Texas Business Organizations Code. When partners disagree about how the business is run, how profits are split or whether one partner is acting in bad faith, the dispute can stall operations and put the value of the company at risk. Many Texas partnerships begin with a handshake and no written agreement, which makes disputes harder to resolve without experienced legal guidance.
Common Partnership Disputes We Handle
- Disagreements over profit distributions, capital calls and draws
- Partner deadlocks on major business decisions
- Breach of the partnership agreement
- A partner diverting opportunities, clients or funds
- Hidden or withheld financial records
- Partner withdrawal, expulsion and buyout disputes
- Disputes over contributions of money, property or labor
- Dissolution and winding up of the partnership
Partner Duties Under Texas Law
Under the Texas Business Organizations Code, partners owe the partnership and each other a duty of loyalty and a duty of care, and must act in good faith and in a manner they reasonably believe is in the partnership's best interest. A partner who self-deals, competes with the partnership or uses partnership property for personal gain may be liable for damages and disgorgement. Texas law also allows a court, in limited situations, to expel a partner or order the business wound up when it is no longer reasonably practicable to carry on.
How We Resolve Partnership Disputes
Every case follows our three-step approach: evaluate, strategize and execute. We review your partnership agreement, financial records and communications, identify leverage, and pursue the fastest path to a resolution that protects your investment, whether that is a negotiated buyout, mediation, arbitration or litigation in state or federal court. When assets are at risk, we move quickly for temporary restraining orders and injunctions.
Warning Signs of a Partnership Dispute
Many partnership disputes build slowly before they explode. Watch for a partner who suddenly restricts your access to bank accounts or bookkeeping software, makes large purchases without approval, stops showing up while still taking draws, forms a new entity, or pressures you to sign amendments you do not understand. Acting early, before records disappear or money moves, gives you far more options. A partnership attorney can review your rights, send a formal demand for records and help you decide whether to negotiate, mediate or file suit.
Partnership Dispute Attorneys Serving Dallas and All of Texas
From our Dallas office, we represent partners in Dallas, Tarrant, Collin, Denton, Harris, Travis and Bexar counties, including Fort Worth, Plano, Frisco, Houston, Austin and San Antonio. Learn what happens when partners can no longer agree, or schedule a free consultation by calling 214-935-1628.
Partnership Disputes: Frequently Asked Questions
Can I force my business partner out of the partnership in Texas?
Possibly. Your partnership agreement may allow expulsion. Without one, Texas law permits a court to expel a partner in limited situations, such as wrongful conduct that harms the business or makes it impractical to continue together.
What if we never signed a partnership agreement?
Texas law can still recognize a partnership based on conduct, such as sharing profits and control. The Texas Business Organizations Code then fills in default rules for duties, profit sharing and dissolution.
Can a partner take clients or opportunities when leaving?
A partner who diverts partnership opportunities or clients while still a partner may breach the duty of loyalty. After leaving, restrictions depend on the partnership agreement and any non-compete or non-solicitation terms.
How long does a partnership dispute take to resolve?
Many disputes resolve within months through negotiation or mediation. Contested litigation can take a year or longer, depending on the issues, discovery and court schedule.
Can a partnership dispute be resolved without going to court?
Yes. Many partnership disputes settle through negotiation, mediation or arbitration. We prepare every case as if it will go to trial, which strengthens your position at the negotiating table.