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A partnership agreement is a legal document that defines the terms of business collaboration between two or more business partners. A partnership agreement template outlines the operation of the partnership, the partners’ duties, their ownership shares, and how profits or losses will be divided.

Samuel J. Parkerson
Template by Samuel J. Parkerson

Table of Contents

Partnership Agreement

When you’re going into business with one or more partners, it’s critical to get on the same page about everyone’s roles, responsibilities, and expectations right from the start. A partnership agreement lays out the ground rules for your business collaboration.

Even though you may create an agreement from scratch, starting with a partnership agreement template will help you avoid missing key provisions and tailor the text to your circumstances.

When to Use a Partnership Agreement

The following are some scenarios where using a partnership contract template is appropriate and highly beneficial:

  • Starting a new business: When partners decide to form a business together, a contract for business partners will outline decision-making procedures, profit sharing, and conflict resolution procedures.
  • Formalizing a partnership: Partnerships without a written agreement often need to formalize the terms as the business expands.
  • Adding or removing partners: A partnership agreement contract guides the admission process of new partners or the departure of existing ones.
  • Clarifying ownership and control: In multi-party partnerships where ownership and control are shared, a business partner contract delineates each individual’s rights and decision-making authority.
  • Resolving disputes and challenges: While disagreements will always arise, a partnership agreement form has clauses that address resolving conflicts and maintaining company continuity.

Terms and Parties of a Partnership Agreement

At the core of a business partnership agreement template are the partners – the individuals or entities collaboratively establishing and operating a business venture.

Some of the critical elements and terms typically addressed in contracts between business partners are:

  • Partnership details: A thorough description of the intended business operations, products/services, and objectives.
  • Partnership duration: Business partnership agreements typically specify whether the arrangement is intended for a fixed or perpetual term.
  • Capital contributions: Investments, assets, or other resources each partner agrees to contribute to the enterprise.
  • Profit and loss distribution: The methodology for dividing profits derived from business activities and allocating losses or liabilities incurred.
  • Decision-making procedure: Directions regarding how key business decisions will be made among the partners.
  • Termination or dissolution: This refers to the circumstances and process by which the partnership business will be dissolved or terminated.

How to Create a Partnership Agreement

When drafting a partnership agreement sample, there are several critical elements that must be carefully addressed:

  • Identify the parties: The full legal names and contact details of all individuals or entities comprising the partnership should be stated explicitly in all business partnership contracts.
  • Describe the partnership: State the goals and the nature of the partnership’s business activities.
  • Set the term: Define the duration of the partnership (it may be a fixed term or continue indefinitely until the partnership is dissolved or terminated).
  • Detail contributions: Enumerate each partner’s investments, tangible/intangible assets, services, or other resources to the partnership.
  • Establish profit and loss distribution: Decide how profits and losses will be distributed among the partners.
  • Define the decision-making process: Describe how key management decisions impacting the partnership business will be made.
  • Specify rules for partnership restructuring: Explain the process for introducing a new partner or removing an existing one.

Establishing a business partnership is a considerable responsibility that involves detailed planning and accounting. Using a business partnership contract template is a practical instrument because it covers all the clauses required for the partnership and can be adjusted to your specific needs.