My Business Partner is Making Decisions Without Me

Many business partners contact our partnership attorneys, stating, “My partner has been making decisions without me and treating me like an unequal partner.” When your business partner is making decisions without you, schedule a time to talk to your partner about your concerns. Always stay calm to influence your partner to remain calm.

Failed Partnership Example

Will and Devon have been hardworking business partners for 20 years. The equal partners run a home building company called Coast to Coast Construction out of Mammoth Lakes, California, and make solid living building houses and contracting with other tradesmen.

After years of hard work, the business experiences a period of fast growth, as many Californians discover the beauty of the Mammoth Lakes area, and the economy takes an upturn. After that, however, the relationship between Will and Devon begins to suffer.

Devon and Will have always supported each other. The two men have different responsibilities per their partnership agreement: Will spends more time on the job sites, and Devon spends more time in the main office. However, as a pair, Will and Devon trust each other and make all the important business decisions. However, problems arise when Will makes crucial decisions without asking his partner.

First, Devon finds that Will has signed off on multiple new home contracts without checking with him. Will is the main builder, knowing that the team will be overwhelmed. Before Will can check in with Devon, Devon signs on a new team of plumbers for one house and a new team of electricians for another, saying he “got a good deal.” Will knows that these new companies may charge less, but their work is sub-par, and the company’s reputation will suffer.

The last straw occurs when Devon fires one of their best builders without asking Will. Will must face that Devon’s behavior is out of control and that Devon’s decisions could seriously harm Coast-to-Coast construction.

Will wonders: what are his rights? Will’s business partner makes important decisions without asking his opinion or even notifying him. Is what Devon is doing legal? What are Will’s rights?

At some point in their careers, many business partners must confront problems within their partnership. Business partnerships are built on productive working relationships, but the business suffers when one partner begins making major decisions without the other partner.

When one partner starts dominating the decision-making process, what rights does the other partner have? If these unilateral decisions harm the business the partners have worked so hard for, is there anything the concerned partner can do?

When one company partner makes major decisions by themselves, the structure of the business and the operating agreement dictate what the other partner can do in response. In this article, we will explain what business partners can do and what their legal rights are when their partners stop including them in key decisions.

Can One Partner Commit to a Business Deal Without the Other’s Consent?

When one partner leaves the other out of important decisions, they often react with shock and anger. Why is my partner ignoring my opinions, they wonder? Do they no longer value my ideas? This situation can quickly strain or even break a partnership.

Behavior like this has many causes. Sometimes, one partner’s ego gets out of control. Other times, they begin to doubt their colleagues’ decisions and want more ownership of the business. Whatever the cause, when one partner makes crucial decisions by themselves, it usually causes a rift and is bad for business.

When a partner is left out of vital decisions, they should review the company’s partnership agreement. Partnership or operating agreements serve as founding documents for most businesses and often help marginalized business partners figure out what to do next.

The partnership agreement usually determines a partner’s power to make decisions. In addition, partnership agreements detail each partner’s rights, responsibilities, and obligations. Therefore, if one partner makes decisions behind the back of another, they may violate the partnership agreement they signed when forming the company.

Therefore, the first and quickest way for partners to figure out and reaffirm their rights is through consulting the partnership agreement. This legal document is binding for all company partners, so even if the partner who dominates the decisions does not agree, they cannot dispute the agreement’s contents.

While every business should rely on a well-written, thorough partnership agreement, some businesses lack this founding document. If that is the case, we suggest contacting an experienced, licensed business lawyer for help determining your rights when dealing with an overbearing partner.

There are also active strategies that business partners can take when the decision-making process falls apart. Next, we will discuss useful strategies for coping with partners who make “rogue” decisions.

What Should Business Partners Do if their Partners Make Major Decisions Without Them?

Sometimes, one company partner begins to dominate the business, and in doing so, they decide that they are the person to make the important choices. When this occurs, some partners are unsure how to act in response and end up doing nothing. However, allowing one partner to make all the decisions only encourages this behavior. Instead, it is best to be proactive when faced with a controlling partner.

When one partner controls all decisions, and the other feels left out or “invisible,” the situation can quickly become emotional or even volatile. Sometimes, the marginalized partner assumes that their partner wants to take over the business or is preparing to force them out.

Other times, the decisions the partner makes are bad for business. It is normal for partners to disagree over crucial decisions from time to time, but they must continue to discuss the choices they make and not decide things by themselves. Successful company partnerships are based on productive discussions, group decisions, and multiple perspectives.

Here are a few suggestions for dealing with a controlling partner proactively. Remember, while partners should not continually avoid conflict, they should try not to immediately create drama.

Engage in Dialogue

A lack of dialogue may be what created this partnership problem. When feeling marginalized, a partner should first make an appointment to speak with their partner.

Chances are that the business partner making all the decisions is busy and may be overwhelmed and stressed out. After voicing your perspective, make sure you also listen to your partner’s perspective. There is a good chance that they are unaware of the problem, and perhaps they think that the decisions they make benefit everyone.

Business partners can straighten many problems out without complicating the matter when they have productive, honest conversations. Partners who speak honestly can often locate the root of the problem and deal with it directly.

Gather Information

Although the partner’s goal is to resolve the problem promptly, often legal help is needed. When contacting an attorney for help with a controlling partner, one of the first things the attorney will ask for is evidence.

Partners unhappy with the decision-making process should collect evidence of the problem. While it can be difficult to prove that a partner is making decisions by themselves, these documents can prove useful if the issue goes to court:

-Signed receipts

-Signed contracts

-Emails, texts, messages

Evidence is necessary to prove that a business partner is ignoring the input of others, so be aware of where and how to find it.

Contact a Business Lawyer

If the partners cannot resolve their dispute through communication, the concerned partner needs to contact an attorney. An experienced attorney will quickly get to work securing the partner’s interests and protecting their rights.

One of the first things a skilled lawyer does in this situation determines the best strategy for moving forward. An excellent attorney understands the issue and then helps the partner decide how to resolve the conflict quickly.

Legal experts will offer partners various choices in this case, including:

-Mediation

-Negotiation

-Litigation

Depending on the dispute’s circumstances, the partner will use the information at hand and the advice of their lawyer to proceed. Sometimes, a controlling partner’s errant decisions stop after mediation. However, sometimes litigation is necessary to save the partnership.

How Can a Business Partner Get Rid of Their Partner?

When one business partner leaves the others out of crucial decisions, the partnership is in trouble. However, before considering dismissing a business partner, it is vital to try tactics such as:

-Conversation

-Mediation

-Negotiation

A skilled business attorney can guide the partners through these processes. If nothing changes, however, it may be time to dismiss the problematic partner.

Forcing a business partner out can be a frustrating process. Some partnership agreements include exit agreements, so reviewing the partnership agreement is the first step. Here are a few more ideas if the partners cannot resolve the situation and one partner must eliminate the other.

Buyout

If the company is profitable, consider buying out the partner causing all the problems. Some partnership agreements feature a buy-sell provision, which will be the buyout deal’s road map.

If the partnership agreement does not contain a buyout clause or there is no partnership agreement, the partners will have to negotiate a new buyout agreement. If the situation is already contentious, this might be difficult, so be sure to contact a business attorney for help with the buyout negotiations. The partners will also have to establish the company’s value through an independent valuation.

Royalty Agreement

Many companies profit from a product they create, and the good news is that the product’s sales can continue even as the partnership changes. Some partnership agreements include royalty agreements, which dictate how a partner can exit the business but still collect royalties from sales of a product they helped create.

Royalty agreements work best if one partner is dedicated to the company and wants to stay with the business. The other is not interested in the company’s day-to-day operations.

Dissolution

If the company is fairly new and the partners’ relationships are already suffering, it might be a good time to cut your losses. Most partnership agreements include instructions on dissolving the company.

Partners should not view company dissolution as a defeat. If the partnership has already devolved into a stressful situation, and profits are marginal, consider dissolution an escape clause. Many talented entrepreneurs understand when to pull the plug on a failing company.

In this case, the best thing to do is to learn from the negatives and bring the positive aspects to the next business venture. Just be sure to choose your business partner a little more wisely.

Lawsuit

Hiring an excellent business attorney and filing a lawsuit can be a productive choice if all other options are exhausted. However, lawsuits can be expensive and time-consuming, so we suggest not leaping blindly into the process. The key to a successful lawsuit is choosing an experienced, reputable lawyer who will work quickly and efficiently to secure the desired outcome.

Speak to Our California Business Lawyers Today

At Nakase Wade, our attorneys understand that disputes are common in partnerships. We have helped many entrepreneurs and business partners deal with selfish and controlling partners, and we have your best interests at heart.

You have rights if your business partner shuts you out of vital company decisions. Contact us today for a free consultation, and we will determine the best path forward and quickly get to work on your case.

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