Partnership Contracts

A partnership agreement is a legally binding document that outlines the key terms and conditions that govern a business partnership between two or more parties. Like a contractor agreement, its purpose is to define each partner’s rights and responsibilities, including their obligations, roles, and how profits are shared between parties.

The partnership agreement covers essential aspects of the partnership, including the purpose of the partnership; duration of the partnership; capital contributions of each partner; division of profits and losses, and more. It can also address issues such as the ownership and transfer of partnership interests, dispute resolution strategies, and arrangements for the dissolution and termination of the partnership.

The board of directors’ role in the writing of a partnership agreement will differ among organizations depending on the structure outlined in their operating agreement. The board could be directly responsible for overseeing the drafting process, protecting the interests of partners, and ensuring the agreement is compliant with all relevant laws and regulations.

Companies may also select an individual or committee to conduct these tasks. The scope of a partnership agreement can be further strengthened with the addition of a confidentiality agreement that provides legal protections for private information.

The best place to start when writing a partnership agreement is to define the key details of the structure. Your partnership can take many forms, so you must declare if you’re going into business with an individual partner, limited liability company (LLC), corporation, or trust. The most common types of partnerships are: General partnerships: Two or more individuals share responsibilities, profits, and liabilities of a jointly-owned business. Limited liability partnership: Every partner agrees to limited personal liability for debts or claims.

Limited partnership: General partners have complete management control and unlimited debt liability, while limited partners only have liability up to the amount of their investment in the business.

This part of the agreement should also include: Your business name The primary business of the partnership What type of business entity is being formed Your place of business and the address of your main office (you can list the home address of your partner if you don’t have a centralized headquarters) Who is eligible to become a partner When the partnership starts You should also note where primary business activities will take place. These details clarify the tasks of each business partner and are also needed for legal and tax purposes.