Friday, November 14, 2014

Third Party Rights in a Company or Partnership Agreements

Does Texas law permit a third-party who is not a party to a company agreement or partnership agreement of a Texas limited liability company, limited partnership or general partnership to nonetheless claim rights under such agreements?

Yes, effective September 1, 2013, Texas amended Sections 101.052 (regarding LLC agreements) and added a new Section 154.104 (regarding general and limited partnership agreements) of the Texas Business Organizations Code to specifically authorize company agreements and partnership agreements to provide such third-party rights if the members or partners so choose to include them in the company agreement or partnership agreement.

According to the author of S.B. 847, which effected these amendments, "While this principle is already implicit in the law, [the bill] makes it explicit in order to eliminate any confusion and to better protect third parties involved in the agreements."

So what third parties might request rights be reflected directly in company agreements and partnership agreements?  Any party that has an interest in the company or partnership or its operation or management, including banks and other lenders, landlords, and franchisors, among others.

No comments:

Post a Comment