General Partnership Agreement

• A Partnership Agreement is also known as:

• • General Partnership Agreement

  • Business Partnership Agreement

  • Partnership Contract

You wouldn’t trust the success of your business or your professional reputation to a handshake or verbal agreement, would you? Of course not. That is why when entering into a business partnership with friends, colleagues, family or none of those, it is essential that you create a Partnership Agreement and have all of the partners sign it.

A Business Partnership Agreement is a legal written contract between two or more parties (individuals or companies) who have agreed to do business together and to share in the profits and losses of the business. The Partnership Contract establishes the rules that will govern the partnership and help to ensure its survival and success. Though not required by law, creating a Partnership Agreement is standard and highly recommended.

Ready in Minutes Using Our Free Partnership Agreement Template

The good news is that you don’t need an attorney to create a Partnership Agreement. Our free Partnership Agreement template makes it quick and easy for you to create your own Partnership Contract. Simply input your information above and in minutes, you can edit, download, print and email your legal document. The Agreement does not require a notary or witnesses, only the signatures of the partners to be legally binding.

Elements of a Partnership Agreement

The information provided here is for a Partnership Agreement for a General Partnership (as opposed to other types of business partnerships, such as limited partnerships and limited liability partnerships).

• Financial Matters – Rights and Contributions

• • The partner contributions (cash and capital contributions) and whether all the partners make the same amount of contributions to the partnership

  • The allocation/distribution of the profits and losses – is the distribution based on a fixed percentage, an equal share, or the partner’s capital contributions?

  • Are some partners, for example, the Managing Partner and the Tax Matters Representative, allocated a bigger share of the business profits?

Partner Authority

it is often assumed that all the partners in a partnership have equal rights and authority over the daily affairs of the business. However, this is not the case. The Partnership Agreement must specify the authority of the partners, including who, when, why, and how a partner can enter into a legally binding agreement on behalf of the partnership or the partners, and set limitations to such authority as well.

Naming a Managing Partner and a Tax Matters Partner

The Partnership Agreement should name a Managing Partner as the designated person who will manage and control the day-to-day running of the business, including keeping business records and preparing business reports. The Managing Partner serves as both owner and executive of the business.

The Contract should also name A Tax Matters Partner. Also known as a Representative for Tax Matters, as the designated person to represent the partnership to the IRS and has the authority to enter into tax agreements on the behalf of the partnership and is responsible for keeping all partners informed of any tax issues.

Partner Involvement in Business and Competition

The Partnership Agreement also governs and directs the time or the amount of attention that the partners must put into the activities of the business and outlines the limitations to the ability of a partner to engage in a separate business venture that directly competes with the partnership business.

Voting

• The Partnership Contract stipulates the situations that require voting, as well as the vote required for a decision to be made.

• • Which decisions require voting, and which do not?

  • Do all partners get equal voting rights, and if not, how are the voting rights allocated –proportionate to the capital contributions or the profit shares?

  • Which matters require majority or unanimous vote?

  • Do partners get to vote on matters such as bringing in a new partner?

Dispute Resolution

One of the most important functions of a Partnership Agreement is to establish in advance how certain disputes between business partners will be resolved in the form of a Mediation Clause that compels the use of a third-party professional mediator or arbitrator. This often eliminates the probability and cost of having to go through the court process to settle issues between the partners.

Withdrawal or Death of Partners

The Agreement also includes the steps to be taken in the event of the withdrawal or death of a partner, such as how the deceased’s share of the partnership will be divided and whether heirs of the deceased partner can have a stake in the partnership.

Dissolution of Partnership

• The conditions for the dissolution of the partnership should be addressed here. They include:

• • The death of a partner

  • Project completion

  • The bankruptcy of the partners or partnership

  • Steps to take during the dissolution of the partnership

Our website will help you create a Partnership Agreement. We offer free on-line samples and templates of legal forms, including Partnership Agreements, that make the process that much faster. Simply fill in the form above to create your own Partnership Agreement.