You built a business with someone you trusted. After the partnership ends, you learn that your former partner has opened a similar company and may be pursuing the same customers.
You may feel they crossed a legal line, but Texas law does not automatically prohibit this type of competition. Whether you have grounds for a legal claim may depend on your agreements and your former partner’s conduct.
Business agreements may limit competition
The agreements you signed may affect what happens after a partner leaves. An operating agreement, partnership agreement or buyout agreement may restrict competition or customer solicitation.
If your agreement includes a noncompete clause, its terms may limit your former partner’s new business. Texas courts may enforce these clauses when they meet state requirements, including reasonable limits on time, geographic area and the type of work.
Company information may have legal protection
Your former partner may have had access to sensitive company information while working with you. Records or materials that have business value may qualify as trade secrets if your company took reasonable steps to keep them secret. Examples may include:
- Customer or prospect lists
- Private pricing or profit margin data
- Protected methods that provide a competitive advantage
Texas law may allow injunctions or damages for trade secret misuse. Whether those protections apply can depend on the information involved and how your company kept it confidential.
When competition raises legal concerns
A competing business may not support a legal claim by itself, but the circumstances surrounding your former partner’s departure could tell a different story.
Your business agreements and company records may help piece together what happened. Together, these details can help show whether your former partner simply became a competitor or may have crossed a legal line.
