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ScottyMacEsq
ScottyMacEsq, Attorney
Category: Legal
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Experience:  Licensed Texas General Practice Attorney
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My partner and I started a general partnership about 6 months

Resolved Question:

My partner and I started a general partnership about 6 months ago. During our time as a GP, our previous employeer sued my partner (not me) over non-compete issues. We ended up settling because it was more costly to fight than we felt it was worth. Out of the setllement, my partner agreed on the parnerships behalf, to not compete against said company's current client list, or any client we found was a client of that company.

We have since formed an LLC. The question(s) I have.
1) now that we are an LLC, do we still follow the same agreement my partner made to not compete? My assumption is yes.
2) My non-compete is up in a few months, do I/LLC have to follow the same stipulations as the settlement my partner made?
Submitted: 1 year ago via Cornell Legal Info Institute.
Category: Legal
Expert:  ScottyMacEsq replied 1 year ago.

ScottyMacEsq :

Thank you for using JustAnswer. I am researching your issue and will respond shortly.

ScottyMacEsq :

1) now that we are an LLC, do we still follow the same agreement my partner made to not compete? My assumption is yes. - Yes, assuming this is still the same legal entity (that is, that you were operating under the same or similar agreement, and the only modification is that you formed the LLC.

ScottyMacEsq :

2) My non-compete is up in a few months, do I/LLC have to follow the same stipulations as the settlement my partner made? - No, so long as you did not sign the settlement agreement. As for the LLC, that's a bit more difficult to say, but assuming that the non-compete that he bound the partnership to was his noncompete, and not yours, or not the partnership not competing, then your non-compete would not be implicated by that.

ScottyMacEsq :

Hope that clears things up a bit. If you have any other questions, please let me know. If not, and you have not yet, please rate my answer. Please note that I don't get any credit for my answer unless and until you rate it a 3, 4, 5 (good or better). Thank you, XXXXX XXXXX luck to you!

Customer:

got it, he settled on his non compete, but i think the company/partnership name was listed as well

Customer:

i never signed anything

ScottyMacEsq :

And ultimately it would depend on the nature of what he specifically signed AND the partnership that was indicated. Changing the legal structure to an LLC might change the terms, but it depends on whether the settlement says that "successors" are bound to this agreement as well.

ScottyMacEsq :

As a partner to the partnership, he can bind the partnership.

ScottyMacEsq :

But it would be the GP that would be bound, if there was no "successor" language that was in the agreement.

Customer:

right...even if his membership to the partnership ceased, if he bound the partnership, it still has to follow the agreement

Customer:

i'll check the language of the agreement...i would be surprised if successors aren't mentioned, but i dont' know specifically

ScottyMacEsq :

Yes, that's correct.

ScottyMacEsq :

(that the partnership would be bound to follow)

ScottyMacEsq :

The reason is that he, in his official capacity, bound the partnership.

ScottyMacEsq :

Now you could start your own business, and assuming there is not any "agents" "employees" "contractors" etc... language in that settlement, you could contract with the partnership to do this business.

ScottyMacEsq :

Ultimately it depends on the specific language of that settlement agreement.

ScottyMacEsq :

Hope that clears things up a bit. If you have any other questions, please let me know. If not, and you have not yet, please rate my answer. Please note that I don't get any credit for my answer unless and until you rate it a 3, 4, 5 (good or better). Thank you, XXXXX XXXXX luck to you!

Customer:

thanks, XXXXX XXXXX things up a bit

ScottyMacEsq, Attorney
Category: Legal
Satisfied Customers: 11296
Experience: Licensed Texas General Practice Attorney
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