What should be in a partnership agreement?

A well-drafted partnership agreement is essential for establishing clear expectations and responsibilities among partners, thereby minimizing potential disputes and ensuring smooth business operations. Key elements to include are:

1. Basic Information:
   • Partnership Name: Specify the legal name of the partnership.
   • Principal Office Location: Identify the main business address.
   • Duration: State whether the partnership is for a fixed term or indefinite.
   • Purpose: Define the nature of the business activities.
   • Governing Law: Determine which jurisdiction’s laws will apply.
2. Capital Contributions:
   • Detail each partner’s initial financial investment, including cash, property, or services, and outline procedures for future contributions.
     Gierach Law Firm
3. Ownership Interests:
   • Specify each partner’s percentage of ownership, which may correlate with their capital contributions or other agreed-upon factors.
     Holmes Business Law
4. Profit and Loss Allocation:
   • Define how profits and losses will be distributed among partners, whether proportionally to ownership interests or through another agreed method.
     FindLaw
5. Decision-Making Authority:
   • Establish the decision-making process, including voting rights, matters requiring unanimous consent, and the scope of authority for individual partners.
     BC LLP
6. Management Roles and Responsibilities:
   • Clarify each partner’s duties, responsibilities, and expected time commitment to prevent misunderstandings.
     Gierach Law Firm
7. Dispute Resolution:
   • Include mechanisms for resolving conflicts, such as mediation or arbitration, to address disputes efficiently and avoid litigation.
     Feldman Law
8. Admission of New Partners:
   • Outline the process and conditions under which new partners may join the partnership, including required approvals and capital contributions.
     Carlson’s Solicitors
9. Withdrawal or Death of a Partner:
   • Specify procedures for a partner’s voluntary exit, retirement, or in the event of death, including buyout terms and valuation methods.
     Carlson’s Solicitors
10. Dissolution and Winding Up:
    • Define the circumstances under which the partnership may be dissolved and the process for distributing assets and liabilities upon dissolution.
      Carlson’s Solicitors

Including these clauses in your partnership agreement can provide a solid foundation for your business, ensuring clarity and alignment among partners.