You may be considering starting a business with family or friends or seeking a partner to take on a share of your business.
Where two or more people decide to go into business together, forming a Partnership is often a valid option.
It is a legally recognised business entity that can exist between two or more people. When these people want to form a business entity, they can draft a Partnership Agreement and decide the rules they are agreeing to work together by.
Forming a partnership can be done orally or in writing. Because a partnership is a legally recognized business entity that imposes certain duties and obligations on its members, you should always be sure of the people you choose to form the Partnership with. It’s one thing to be friends with a person. It’s another to form a business entity with them and go about making money.
If you enter an agreement with someone else to do business and make money, you may automatically form a partnership without knowing it. Whenever you want to make money with other people, you should first set out the terms of the agreement in writing. You don’t want an assumption that went unsaid to come back and haunt you later.
You have a great deal of discretion in drafting Partnership Agreements. However, some issues are determined by law. Partners can agree to share or delegate responsibilities, how they will share profits and losses, and many other issues.
Creating a written agreement is the most important step you’ll take when entering a partnership. You’ll need to make sure you have as much information in it as possible so no-one is left confused or unsure of what their responsibilities, rights or obligations are.
You could enter into a partnership with a verbal agreement, BUT…you run the risk of disputes over uncertain terms that were discussed at the time the arrangement was made. This written legal agreement helps prevent these disputes as the parties involved know exactly where they stand.
These agreements need to state the purpose for which they are formed, the name of the business, the length the Partnership is intended to last, and much more. Sometimes, extra agreements, such as a Confidentiality Agreement , need to be included, to keep certain sensitive information protected.
Your agreement should cover all contingencies, especially what happens when one or more people want to get out of the business, for any reason. You can include terms to determine what is to happen if you’ve entered an agreement with other people who want to sell the business or shut it down, but you want to keep going. Your agreement has to be clear about how to continue with running if one of these situations arises.
Starting a new business can be a fun and exciting time. It can also be a stressful, difficult time. If you’ve decided to be partners with other people, you owe it to yourselves to make your agreement as precise and clear as possible. Partners need to be able to rely on one another. They also need to understand how the business is supposed to work. Leaving an agreement silent on an important matter is the surest way to see your partnership end in less than happy circumstances.
Partnership Agreement Available for Immediate Download
