Conflicts can sometimes arise when one business partner wants to exit the partnership before the other is ready. The partner who remains may even claim that the other person is abandoning the business and causing significant harm.
Ideally, the way that someone exits a partnership should be defined in the partnership agreement and contractual documentation that was drawn up at the very beginning. They need to follow the proper steps.
For instance, they may be told that they have to give a certain amount of advance warning. The partnership agreement could also stipulate what equity they have in the business and how they can receive those financial assets upon exiting. This can often be a point of conflict, because the remaining business partner may not have the cash on hand to buy out the other person’s ownership share.
What if they breached the contract?
It may become abandonment if the partnership agreement was breached or when the person who is leaving intentionally harms the business, often for their own gain.
For instance, perhaps they have been offered a chance to start a business with someone else who will bring a significant amount of investment capital. Their plan is to abandon the original partnership, taking their knowledge, skills, experience and even trade secrets with them. The original business partner may want to sue, saying that they have harmed the company, especially if they exited the partnership without warning.
That being said, business partners do have the option to step away from the company if they want to do so. Simply deciding to move on is not necessarily a legal issue unless they have violated the agreement that they signed.
This can create a very complex legal situation, where both business partners may view things quite differently, and it can help to work with an experienced law firm to find a solution.