Legal Question in Business Law in California

This is a tough question to answer, and I think there are three possible outcomes: (1) a court could enforce the Texas Shootout provision exactly as written, finding that the parties' failure to modify or delete it when the percentages of ownership changed showed an intention to leave it undisturbed, or at least an acquiescence in leaving it alone; (2) the court could rule that the Shootout provision was impliedly waived or cancelled, since it contemplated equal ownership, a condition no longer existing; or (3) the court might leave the Texas Shootout concept in place, but blue-pencil its terms to tailor it for a situation where the ownership is no longer 50-50.

Which of the three possibilities the court might adopt would be fact-sensitive and would probably require the court to ask, "What would a knowledgable, reasonable and impartial bystander believe was the parties' intention, understanding or agreement as to this very issue at the time the agreement was made, and/or at the time the ownership percentages were changed?" Evidence and testimony would be required.

Note that if the court finds the Texas Shootout provision was waived, or has become void, and cannot be applied to the present situation, you'll default back to the dissolution provisions of the Revised Uniform Partnership Act, which likely would produce a result similar to (3) above, so maybe (2) and (3) are not too different in net effect.

Sorry not to be able to be more precise. Two sets of further facts would be helpful: (a) the exact wording of the partnership agreement (and any number of its provisions might bear to a greater or lesser degree on the answer); and (b) an understanding of the circumstances that changed the ownership percentages from 50-50 to 60-40.