As the saying goes, “good fences make good neighbors.” In the world of business partnerships, the equivalent adage might be, “good contracts make good partners.” Whether you`re starting a new business venture with a friend or colleague, or formalizing a longstanding collaboration, putting your partnership agreement in writing is essential.
Why You Need a Partnership Agreement
There are many reasons why a written partnership agreement is a must-have. Here are just a few:
1. Clarify Expectations: A partnership agreement allows you to clearly define the roles and responsibilities of each partner. This can help prevent misunderstandings and conflict down the road.
2. Protect Your Interests: By outlining the terms of your partnership in writing, you can protect your investment and ensure that your interests are represented in the agreement.
3. Prepare for the Unexpected: No one likes to think about the worst-case scenario, but it`s important to have a plan in place in case things don`t go as planned. A partnership agreement can address issues like dissolution, dispute resolution, and succession planning.
4. Maintain Professionalism: A written agreement demonstrates that you take your partnership seriously and are committed to working together in a professional, organized manner.
What Should Your Partnership Agreement Include?
The exact contents of your partnership agreement will depend on your specific situation, but here are some key elements to consider including:
1. Partnership structure: Define how your partnership will be structured (e.g. general partnership, limited partnership, LLC, etc.).
2. Capital contributions: Specify how much each partner will contribute to the partnership, and whether contributions will be in cash, property, or services.
3. Profit and loss sharing: Outline how profits and losses will be distributed among partners.
4. Roles and responsibilities: Detail the duties and responsibilities of each partner.
5. Decision-making: Clarify how decisions will be made within the partnership, and whether certain decisions require unanimous or majority agreement.
6. Dissolution: Plan for the possibility of dissolving the partnership, and include procedures for how it will be handled.
7. Dispute resolution: Provide a framework for resolving disputes between partners.
8. Non-compete and confidentiality clauses: Protect the partnership`s interests by including non-compete and confidentiality clauses.
Getting Professional Help
While you can certainly draft a partnership agreement on your own, it`s a good idea to seek the advice of an attorney or other legal professional. A lawyer with experience in partnerships and contracts can help ensure that your agreement is legally sound and covers all the necessary bases.
In conclusion, a written partnership agreement is a crucial document for any business collaboration. By clearly defining expectations, protecting your interests, preparing for the unexpected, and maintaining professionalism, you can set your partnership up for success. Be sure to consult with a legal professional to ensure that your agreement is comprehensive and legally enforceable.