The Benefits of the Partnership Agreement in Louisiana
Before you get into any business with another person or before engaging with another company on important matters, you need first to make sure that you have a written document that lays out the terms and the rules of engagement for the venture. You also need to ensure that the document you are signing is fair and that the information laid out is concrete, unbiased, concise, and agreeable.
With many businesses going under because of poorly regulated standards, and in other cases, the absence of ground rules, you need to ensure that you are not in a business that would fall easily because of weak structures. At the same time, you need to make sure that the strict terms of business are written down in legally binding documents enforceable in the state.
The partnership agreement is the document that ensures that the partnership you are getting into is solid.
While all the states have laws that govern business partnerships, Louisiana is the only state that doesn’t have these rules. But this doesn’t mean that you should enter a business partnership without a partnership agreement.
Also called a business partnership agreement, a general partnership agreement (for general partnerships), or a partnership contract, the partnership agreement is an important document that controls most of the aspects of the partnership’s life. The agreement lays out the rules, responsibilities, and the relationships among the partners, and also between the partners and the partnership. Thanks to the provisions of the partnership, the extent to which a partner can act or make decisions on behalf of the partnership or the other partners is determined, and the obligations of each partner stipulated.
The partnership contract, therefore, defines the terms and the conditions of the partnership relationships.
To create a business partnership agreement in Louisiana, download our free Louisiana partnership agreement form here then constitute the elements that affect your partnership. The forms offered are downloadable, editable, and printable, with the sample partnership agreement being easy to use and applicable state-wide. You might also like the fact that the signatures of the partners are enough to make the agreement enforceable, which means that you don’t have to notarize the contract.
Key Elements of the partnership agreement
Name of the business partnership
The goals/ purpose of the partnership
The term/ duration of the partnership
Capital and cash contributions of the partners, including future contributions, property contributions, intellectual property, cash, and service contributions.
Ownership interests of the partners
Management duties and the terms of authority for the partners
Limitations to the partners’ authority
The distribution of profits and losses between the partners, recovery of losses, and the timing for profit draws from the partnership
Maintenance of the books of accounts and the acceptable recording methods
Salaries, sick leaves, vacation times, and the work hours for the partners
Restrictions and permissions regarding carrying out competing businesses outside the partnership business.
Options for partner buyouts
Procedures for adding new partners
Terms for terminating the partnership
Dispute resolution procedures
With a partnership agreement that encompasses all these sections, you reduce the risk of misunderstandings, as well as disputes among the partners and between the partners and the partnership, increasing the chances of the business success.
Benefits of a partnership agreement in Louisiana
It prevents the instigation of the default state rules and laws
Without a partnership specific to your business, the state would, in the event of a dispute, be forced to apply a blanket rule to the partnership depending on whether you constituted a general or a limited partnership. Oftentimes, such decisions result in bad blood among the aggrieved partners, especially where the court ruling is unfavorable to some partners.
Specifies control and ownership of the partnership
To ensure that the initial partners maintain a favorable ownership stake of the business, the partnership contract should have reasonable restrictions on things like the sale or the transfer of the company’s ownership interests. This contract is important because, without it, partners might end up selling their ownership interests in the business partnership, even without the business’ competitor.
The control issue also applies to the procedures that kick in when a partner passes on, and the deceased spouse or children inherit the stake of the deceased partner.
Prior Agreement in important issues
The written agreement allows the parts to have an advance agreement on specific aspects of the partnership, for example, dispute resolution and the need for the warring partners to be compelled into mediation or any other alternative dispute resolution options like arbitration.
Removal of a non-performing or a disruptive partner
This is the other area of contention in partnerships that can be avoided well-executed with stern rules/ provisions in the contract. This provision ensures that the interests of the partnership are protected at all costs, even when the partners are close friends/ members of the family.
Protection of the partners’ investment and business
The partnership contract must address the procedures to be followed if a partner is declared bankrupt or if they die. Without procedures on what is to be done in such circumstances, the business and partners’ investments might be impacted negatively and put at risk. The agreement should also include non-compete and confidentiality agreements.
Ready to create a partnership in Shreveport, New Orleans, Baton Rouge, Alexandria, Lake Charles, Metairie, or any other city in Louisiana? Download our free partnership agreement form here to get started.