“Saddle up Par’dner!”: Partnership Agreements

Posted: February 18, 2010 | Last Updated: August 09, 2016

Posted: February 18, 2010

Written by: Brant Harvey

Partnerships are a common and effective method to carry on business.  They typically allow individuals to combine their specific talents, skills, and resources in a way that (ideally) creates a more successful business enterprise than could be achieved by each partner on their own.   As mentioned in a previous posting, whether a person forms a general partnership or a limited partnership, it is critical to have a well crafted partnership agreement in place.

 Among other issues, a partnership agreement may address:

 1.  Length – how long will the partnership last?  Is there a specific term in mind?

 2.  Business Limitations –  is there a limitation on the type of business that the partnership can carry on?  What is the scope of the business?

 3.  Capital Contributions – how much is being contributed by each partner?

 4.  Division of Profits, Expenses, Losses – how are these calculated or addressed?

 5.  Termination of Partnership – what mechanisms are in place to enable a partner to withdraw or terminate the partnership?

 6.  Assignment and Addition of a New Partner- can a partner assign their interest in the partnership? How can a new partner be added to the partnership?

 7. Valuation – what is the method by which the partnership will be valued? What is included in the value of the partnership?

 8.  Dispute Resolution – how are disputes among the partners to be resolved?

The above is not an exhaustive list of what should be included in a partnership agreement, and the final form of a partnership agreement will depend on the specific issues of a particular partnership.  Before you “saddle up” and begin a partnership, it is a good idea to consult your legal professional.