Partnership Agreements: Protecting Your Business

A Partnership Agreement is a critical document for any business with two or more partners. It sets out the rights and obligations of the partners and provides for the management of the partnership.

Profit Sharing

The agreement should clearly state how profits and losses will be shared among the partners. This can be based on each partner's capital contribution or some other agreed-upon formula.

Liability

In a general partnership, all partners are jointly and severally liable for all debts and obligations of the partnership. A written agreement can help to define each partner's personal liability.

Dispute Resolution

The agreement should include a process for resolving disputes among the partners. This can include mediation, arbitration, or some other form of alternative dispute resolution.

Dissolution & Termination

• Buy-Sell Provisions: State what happens if a partner wants to leave the partnership.
• Valuation: How the partnership will be valued in the event of a buyout or dissolution.
• Distribution of Assets: How the assets of the partnership will be distributed after all debts have been paid.

Next Steps

It is important to have a lawyer or paralegal review your partnership agreement to ensure it is legally sound and protects your interests.