Partnership Agreement

A Partnership Agreement is made between two or more parties entering into business together in the form of a partnership. The agreement will define how the partnership will actually operate. 

Frequently ‘partnerships’ emerge organically between two individuals fleshing out a business venture they wish to create together. In which case, what is agreed verbally does have legal standing, but it should be formalised into a written contract. Having the obligations, expectations and rights in a written document will help prevent disputes that may emerge downstream.

A Partnership Agreement will typically cover the following areas:

• Financial Contributions
  The financial contribution each partner will make
• Profits and Losses
  The manner profits and losses will be managed by the partnership
• Obligations
  The obligations due to each partner
• Rights
  The rights due to each partner
• Dispute Resolution
  In the event of a dispute, a mechanism for resolving disputes should be defined
• Term
  The length of time the Agreement is to last for
• Exit
  The way the exit by one of the partners will be managed
• Other Agreements
  Whether other agreements can be entered into by one of the partners that bind the partnership