Legal Question in Business Law in California

Re: Partner's rights

A person may become a partner of a partnership only with the consent of all of the partners. Corporations Code section 16401(i).

If your partner transfers his or her interest in the partnership to another, that partner can be expelled from the partnership. Corporations Code section 16601(4)(B). If the partner is expelled, the remaining partner(s) can elect to wind up the partnership's business or to continue. If the decision is to continue, then the dissociated partner is bought out as set forth in Corporation Code sections 16701 to 16705 and if the partnership business is to be wound up rather than continued, then sections 16801 to 16807 would govern instead.

So, the bottom line is that your partner can't admit a stranger and if he/she does sell his/her economic interest, he/she can be kicked out and paid off, if indeed owed anything at that point.

If the business is worth anything, you should probably retain a lawyer well-versed in partnership law to guide you through the statutory process.

Re: Partner's rights

The only thing I might to my colleague's analysis is that this subject might be covered in a written partnership agreement if one exists for your partnership. I've prepared partnership agreements that specifically cover procedures on admitting new partners or sellingn partnership interests.