The paper presents a study of the fracture behaviour and ultimate resistance of lap joints failing by shear-out rupture, including experimental, numerical, and theoretical investigations. Four double shear lap joints were tested, confirming the two limiting failure modes of shear-out failure and tension rupture. A parallel finite element model was developed to simulate the lap joint behaviour, incorporating two “local” fracture criteria. The finite element results clearly demonstrate the significant influence of friction between the bolt shank and ply plate on the shear-out capacity of the joints. New design formulae are proposed to predict the shear-out capacity, considering friction between the bolt shank and ply plate as well as the ply plate geometry. The proposed design equations consider the distribution of shear stresses around the bolt hole and thus can accurately predict the shear plane position. The proposed design equations are compared with finite element parametric studies and the strength predictions by existing design codes. The comparison demonstrates that the proposed equations provide improved prediction of shear-out capacity.