Important Sections of the Partnership Agreement in Kansas
A partnership agreement, also called a business partnership agreement, a general partnership agreement, or a partnership contract, is an integral part of the partnership business puzzle. And despite the state of Kansas noting that the partnership agreement is not a mandatory document in the registration of a limited partnership, constituting this agreement is one of the smartest business decisions that you must make.
For starters, the partnership contract offers a great deal of clarity on different matters affecting the partnership, as it outlines the roles of the parties involved, as well as their obligations and what is expected of them. This agreement also clarifies the relationships between the partners and between the partners and the partnership.
With many partnerships around crumbling because of the absence of firm foundations and guidelines, you’ll only blame yourself if you overlook this document.
That said, we’re here to help. You don’t necessarily have to hire a lawyer to have this document prepared thanks to our free Kansas partnership agreement form. This legal partnership agreement template offers a comprehensive overview of what your partnership contract should look like while shedding light on the most important components of the agreement.
You should also consider using our sample partnership agreement since it’s downloadable, editable, printable, and it doesn’t have to be notarized to be enforceable.
If this is your first time creating/ using a partnership agreement, the next section of this article takes you through the sections that must be covered in your Kansas partnership agreement for you to circumvent and resolve issues before they happen.
Financial Rights and Obligations
One of the biggest causes of failed business partnerships is a matter that regards to finances. While partners assume that things will run smoothly as long as each partner makes a substantial or an equal cash/ capital contribution, problems often arise when one partner offers more of their professional expertise or any other service, compared to the rest of the partners. In such cases, this partner will feel that they are entitled to a bigger share of the profits/ income. If these expectations are not met or managed by the governing rules in a signed contract, it brews trouble that could result in the collapse of the business.
Therefore, when creating a partnership agreement in Kansas, you need to confirm and stipulate the rules applicable to different financial matters. These matters include:
- The capital/ cash/ services/ property contributions of the partners and the ownership stake of each partner.
- The allocation of profit and losses – whether the distribution is based on capital contributions, a predetermined percentage, or if the profits and losses are shared equally among the members.
- When and how much a partner can draw their share of the profits
- How the losses will be recovered
- Maintenance of the books of accounts.
- The profit share of the managing partner, and whether the managing partner earns a salary in addition to the profits or not.
Unless it’s provided for in the partnership agreement, any partner would have the authority to engage in or undertake an activity that is binding to the partnership and other partners. To prevent this from happening or to limit the authority of the partners, you’d need to include a clause that specifies what a partner can and can’t do on behalf of the rest. This provision would also specify a partner’s limitations. For example, a partner would be limited from engaging in binding contracts where he or she lacks the professional qualifications to enter into such contracts.
Decision making and voting
Along with what partners can and can’t do, the partnership contract would be incomplete without an outline of the elements of the business and the decisions that would only pass through a majority or a minority vote.
Here, the duties of the managing partner and the things he/she has control over would be listed. And the tasks that would require the approval of the other partners also listed. For example, the managing partner would be responsible for ensuring that there are proper accounting records, but they wouldn’t be permitted to admit new partners.
New partners and withdrawal of partners
If the partnership admits new partners, the conditions to be met by the newcomers must be outlined, and for exiting partners, their exit procedures will be outlined here as well.
There should also be a provision to govern the steps to be taken upon the demise of a partner.
The biggest reason for constituting a partnership agreement is to ensure that there are set rules that guide the partners and the partnership in the event of disputes. Therefore, the contract must have a section on dispute resolution. A mediation clause is necessary as it calls for the involvement of a third-party mediator or arbitrator to help resolve the dispute.
Dissolution of partnership
The conditions that would necessitate the dissolution of the partnership would be covered here.
Whether you are in Lawrence, Topeka, Wichita, Kansas City, Olathe, Overland Park, Manhattan, or any other city in Kansas, our free partnership agreement form will help you create an enforceable partnership agreement today.