A Partnership Agreement is a legally binding contract that establishes a relationship between two or more people, who wish to join as partners and form a “for-profit” business together.
Perhaps the most distinctive aspect of a partnership agreement template is that it does not offer liability protection to partners, unlike an LLC or an LLP. Rather, partners are personally, jointly and severally liable for the debts and obligations incurred by the partnership.
Partnership Agreement Key Terms
This partnership agreement template will outline key aspects of the partnership, including:
- Partners’ initial capital contribution
- The purchase of partnership property
- Each partners’ rights, duties, responsibilities, and liabilities
- How business decisions are made
- How to decide partnership percentages
- Compensation for partners
- Plans for handling money and legal issues and disputes
- How the business will be managed
The Importance of A Partnership Agreement
A partnership agreement is a legally binding document or template that establishes a clear set of rules and principles between the partners. It also clearly defines the internal processes of the partnership across different areas.
The partnership agreement is also provides great guidance on to how to deal with issues or disputes that may arise between the partners in the future, and makes those issues or disputes more easy to solve. By having a partnership agreement in place, that is valid and enforceable, all the partners to the agreement will be on an equal footing from the outset.
Most importantly, the absence of a valid partnership agreement template would mean a total reliance on the default state statutes that govern partnerships. For example, many states have adopted the Revised Uniform Partnership Act, and under this statute, partners are actually entitled to an equal division of profits, even if the partners’ capital contributions were all different.
Also, a number of states have adopted harsh default rules of partners leaving a partnership, which could result in immediate termination of the entire partnership, and without regard to the interests of the partners still in the partnership. It’s clear that a failure to execute a partnership agreement would leave the partners with little to no control to executive decision making capabilities.
Product ID: 23922AL44
⇒ Revisions Approved
⇒ Plain English & Easy Editing
⇒ Guidance Notes Included
⇒ Money Back Guarantee
⇒ Length: 5 pages (min.)
⇒ Last Revision: 28 June 2020
⇒ Format: MS Word (.DOCX)
⇒ Rev. Number: 13399100
⇒ Product ID: 23922AL44