Business Partnership Agreement Template
Navigating the modern business world is like setting sail in unpredictable waters; having a reliable compass can be a game-changer.
A business partnership agreement is that compass. It provides structure and security for all parties involved, allowing you to focus on what truly matters: the success of your business.
What is a Business Partnership Agreement?
A business partnership agreement is a legal document outlining each partner’s roles, responsibilities, and financial contributions within a business arrangement. This comprehensive contract is typically established between two or more business owners, forming a safeguard to ensure a harmonious, productive relationship.
The primary purpose of this agreement is to protect all parties involved. It clarifies matters ranging from dispute resolution and capital contributions to profit distribution and amendments. Detailing each partner’s role and expectations can prevent potential misunderstandings, fostering a healthier and more productive business partnership.
Without such an agreement, the business might fall under your state’s default rules, which may not be in the best interest of your partnership. This document serves as a tangible representation of each partner’s understanding, forming the bedrock of your collaborative business endeavor.
DISCLAIMER: We are not lawyers or a law firm and we do not provide legal, business or tax advice. We recommend you consult a lawyer or other appropriate professional before using any templates or agreements from this website.
When to Use a Business Partnership Agreement Template
A business partnership agreement template should be used when entering a business partnership. It’s not only for large corporations but also small businesses and startups. It’s relevant in various industries- technology, food service, or manufacturing. A partnership agreement is essential if two or more individuals collaborate to start or run a business.
One significant advantage of using a template is its simplicity and speed of the process. A template can be a lifesaver, especially when you’re not familiar with the ins and outs of legal language. It provides the basic framework, highlighting the essential elements in your agreement, ensuring you pay attention to important details.
For instance, imagine you’re opening a bakery with a friend. With a business partnership agreement template, you can clearly define your roles—who’ll manage supplies, who’ll handle the baking, how profits will be shared, etc. This transparency will help maintain harmony, facilitate growth, and mitigate potential disputes, ensuring your bakery thrives.
Perhaps you are an artist collaborating with a gallery owner. A partnership agreement can explicitly state the percentage of sales each party receives and detail responsibilities such as marketing and promotion, hosting exhibitions, and artwork transportation.
Similarly, for real estate developers planning a joint venture, a partnership agreement can clarify profit sharing, capital contributions, property acquisition, development duties, and how potential losses would be handled.
These scenarios illustrate the broad applicability of partnership agreements and the ease of a well-structured template.
Download our Partnership Agreement
The implications of not using a business partnership agreement with partners can be catastrophic to your business. That’s why we’ve created a simple template to help protect your business.
What to Include in a Partnership Agreement Template
When entering into business partnerships, having a clearly defined agreement is critical. Without a precise understanding of each partner’s role within the association and the expectations for both parties to fulfill, you may find yourself in a compromising and overwhelming situation down the line.
A partnership agreement template can provide this clarity by adhering to best practices for accountability and reliability between parties—but what should it include?
Below are some essential factors you should consider when creating your tailored partnership agreement template.
Business Information
The agreement should commence with the basic business information. It should clearly mention the legal name of the business, the type of business (e.g., limited liability company, limited liability partnership agreement, etc.), the business address, and any other significant details that identify the business.
For instance, if you’re establishing an innovative tech startup, your agreement should clearly state your company name, address, and the fact that you’re in the technology industry.
It’s vital to outline the primary purpose of your business as it helps delineate the boundaries of your operations, providing a clear focus for your partnership.
Partner Information
Understanding who you’re shaking hands with is equally important. Include comprehensive information about each partner, covering their full names, addresses, and contact details.
Beyond the basic partnership details, the agreement should also discuss why the partnership is being formed. Is it for specific expertise, financial contributions, or network access? Make this clear to underline the value each partner brings to the table. For example, if you’re partnering with an industry veteran for their experience and vast network, that should be highlighted here.
Timeline
Your partnership is not a timeless saga; it needs a defined timeline. This section details the duration of the partnership—when it will start and the circumstances under which it will end.
In some cases, the partnership could be indefinite, continuing until a specific event occurs, such as the retirement or death of a partner or the achievement of a particular goal. Others might have a predetermined end date. Make sure to clarify this upfront to prevent future uncertainty.
Capital Contributions
Nothing can stir the pot of disagreement like money. Therefore, the partner capital contributions of each partner need to be explicitly outlined in your agreement.
This section should include the amount of money, property, or services each partner will contribute to start the business and any expected future contributions. Moreover, the document should clarify how these contributions affect the ownership percentages of each partner.
For example, suppose Partner A contributes $70,000, and Partner B contributes $30,000 to the business. In that case, the agreement might state that Partner A owns 70% of the company while Partner B owns 30%. This reflects their initial capital investments– which may fluctuate over time.
Roles & Responsibilities
In business partnerships, clarity is the key to a pleasant journey. Clearly defining each partner’s roles and responsibilities can help avoid confusion and disputes in the future. Include who makes day-to-day decisions, oversees employee management, and deals with financial affairs.
For example, in a software development firm, one partner might handle technical aspects while the other manages marketing and customer relations.
It’s not enough to define the roles; responsibilities tied to these roles should also be clearly outlined. This ensures accountability, keeps partners focused, and contributes to the efficient functioning of the business.
Admitting New Partners
Growth often means expansion, which may involve admitting new business partners to the association. Your agreement should include a clause that outlines the process for adding other business partners.
Will it require unanimous consent, or will a majority vote suffice? What will be their capital contributions and ownership share? Spell out these details to streamline any future additions to your business partnership.
Amendments to the Agreement
The business world is dynamic, and your partnership agreement should be flexible enough to accommodate changes. Specify how modifications to the contract can be made.
Will all partners need to agree, or will amendments be made based on majority voting? Providing a straightforward amendment process will ensure your agreement remains relevant and applicable over time.
Dispute Resolution
Even the best business relationships can encounter turbulent waters. Disputes might arise, and having a dispute resolution procedure in place can prevent these disagreements from capsizing your partnership.
Consider including provisions for mediation or arbitration instead of litigation, which can be costly and time-consuming.
Withdrawal or Death
Unfortunate events, such as a partner’s withdrawal or death, should be considered when drafting your partnership agreement.
Provide clear guidelines on what will happen under these circumstances. Will the business continue, or will it dissolve? How will the departing partner’s share be valued and disbursed?
Dissolution
While it’s not something any business partnership wants to consider, preparing for all possibilities, including dissolution, is crucial.
Outline under what circumstances the partnership may dissolve, such as a partner’s retirement or project completion. Specify the process for winding up the business, settling debts, and dividing assets.
Don’t forget to detail what happens if partners disagree on dissolution. You could require mediation or use a predetermined formula to buy out a partner’s ownership interest.
Voting Rights
Every partner’s voice matters, and the agreement must ensure fair representation of each one.
Voting rights are usually proportional to a partner’s share in the business, but you can also set them equally regardless of capital contribution. Decide whether all decisions need unanimous consent or if a majority is sufficient.
Profit & Loss Distribution
This is the heart of the economic engine that drives your partnership. Establish an explicit formula for distributing profit and loss among partners. It could be equal shares or proportionate to capital contributions or work hours. You might also consider how often distributions occur and what happens in the case of a loss. Be as transparent as possible to prevent future disputes.
Tax & Accounting Information
Here’s where many businesses stumble—financial administration. Identify who is responsible for maintaining the books and handling tax filings. Specify the fiscal year-end and when financial reports are due. Also, consider including a clause that allows partners to inspect financial records upon request.
Signatures
Remember, these are guidelines, not hard-and-fast rules. Your business is unique, so your partnership agreement should also be. Don’t hesitate to tailor it to your needs. When it’s time to put ink to paper (or, in this digital age, e-signature to PDF), Signaturely is there to help. Secure, efficient, and legally binding, the e-signature solution ensures that closing your business agreement is as smooth as the journey we’ve taken through this guide.
Tips for How to Write a Business Partnership Agreement
Embarking on a business partnership is exciting, but you must ensure the journey is smooth. Here are some handy tips for crafting a comprehensive and transparent partnership agreement:
- Discuss, Discuss, Discuss: Before you even start writing, have thorough conversations with your partners about each aspect of the business. Be open, honest, and ensure everyone’s expectations align.
- Avoid Legal Jargon: Keep the language straightforward so all partners understand the content. If technical terms are necessary, provide definitions.
- Details Matter: Don’t leave anything to assumption. Being explicit prevents future conflicts, whether it’s about duties, dispute resolution, or profit distribution.
- Consider Future Changes: Businesses evolve, and so do partnerships. Include clauses that address possible future scenarios like accepting new partners or buying out existing ones.
- Use an E-signature Platform: An e-signature tool like Signaturely can simplify the process once your agreement is ready. E-signatures save time, provide a secure platform, and gives you a legally binding signature— without the guesswork.
Download our Business Partnership Agreement
The implications of not using a business partnership agreement with partners can be catastrophic to your business. That’s why we’ve created a simple template to help protect your business.
FAQs About Business Partnership Agreements
Below are some of the common questions people have about partnership agreements.
Yes, you can. While getting legal advice is a good idea for complex partnerships, many straightforward agreements can be self-drafted using templates and guidelines.
A simple partnership agreement should include basic details like business information, business partner roles and responsibilities, capital contributions, profit & loss distribution, and provisions for disputes, amendments, and dissolution.
Forming a partnership involves discussing and agreeing on the terms of the partnership, writing and signing a partnership agreement, and registering the partnership with the appropriate government agency.
The simplest form is a general partnership where two or more partners share responsibilities, profits, and liabilities equally.
When signed by all parties, a partnership agreement is legally binding. It can be used in court to resolve disputes. However, the enforceability of specific sections within the contract may vary depending on your state’s regulations.
While starting a partnership without a contract is possible, it’s not advisable. A partnership agreement provides clarity, sets expectations, and protects all partners.
What You Need to Remember About Partnership Agreement Templates
Going through the partnership journey doesn’t have to be a turbulent endeavor. A well-drafted partnership agreement forms a solid foundation, providing clarity, averting misunderstandings, and setting the stage for harmonious cooperation. Infuse it with transparency, detail, flexibility, and legal validity, and you have an agreement that protects and propels your business forward.
This process becomes even more streamlined with the right tools, such as Signaturely. Remember, your partnership agreement is more than a document; it’s the roadmap to your shared entrepreneurial journey. Embrace it as a necessary step in your path toward collective business success.
Business Partnership Agreement Template
Business Partnership Contractual Agreement
PARTIES
- This Business Partnership Contractual Agreement (hereinafter referred to as the “Agreement”) is entered into on ________________ (the “Effective Date”), by and between ________________________, with an address of ________________ (hereinafter referred to as the “First Partner”) and ________________with an address of ________________ (hereinafter referred to as the “Second Partner”) (collectively referred to as the “Partners”).
PARTNERSHIP PURPOSE
The Partners agree that the purpose of this partnership is ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
TERM
- The Partners agree that the partnership will begin on the date of signing this Agreement and will continue until its termination.
BUSINESS LOCATION
The Partners agree that the location of the business will be at ________________________ and any change to the location of the business will only occur by providing an attached amendment to this Agreement signed by the Partners.
NEW PARTNERS
The Partners agree that no new partners may be added to this Agreement and partnership.
CAPITAL CONTRIBUTIONS
- The Partners agree to the following capital contributions in case or in property or other forms of contributions.
Partner | Contribution Description | Value |
INTEREST
- The Partners agree that there will be no interest on any capital payment by either of the partners including any additional capital contributions made.
PROFITS AND LOSSES
- The Partners agree that the appointed accountants will be responsible to determine the profits and losses of the partnership.
- The profits and losses will be determined in accordance with the Partners capital contribution values as examined and deduced by the appointed accountants at the end of every fiscal year.
BORROWING OF PARTNERSHIP INTERESTS
- The Partners agree that no money will be borrowed from the business without the prior written consent of the other partner.
FINANCIALS STATEMENTS
- The Partners agree to provide a financial statement at the end of every fiscal year showing the income and expenses of the business indicating and providing each partner’s share of the profits.
VOTING
The Partners agree that their voting weight is determined as follows: ______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
MANAGEMENT
- The Partners agree that the business will be managed as follows:
______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Meetings
- The Partners agree that meetings will occur at the headquarters of the Partnership or in any other place as agreed by the Partners.
Calling of Meetings
- The Partners are entitled to call for a meeting by providing a reasonable notice beforehand.
DEATH
- The Partners agree that in case of death of either of the partners, the surviving partner will be entitled to purchase the interest of the decedent in the partnership from the heirs and/or assigns.
- The Partners also agree that the surviving partner will be entitled to terminate this Agreement and partnership.
TERMINATION
- The Partners agree that this Agreement and partnership may be terminated as follows _______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
AMENDMENTS
- The Partners agree that any amendments made to this Agreement must be in writing where they must be signed by both Partners to this Agreement.
- As such, any amendments made by the Partners will be applied to this Agreement.
SEVERABILITY
In an event where a provision of this Agreement is found to be void and/or unenforceable by a court of competent jurisdiction, then the provisions remaining will continue to be enforced.
DISPUTE RESOLUTION
- Any dispute and/or difference arising out of or related to this Agreement will be submitted to ________________ (Arbitration/mediation/negotiation) according to, and subject to the laws of ________________.
GOVERNING LAW
- This Agreement will be governed by and construed according to the laws of
ENTIRE AGREEMENT
- This Agreement is complete and with respect to the subject matter herein, supersedes all and any prior agreements, understandings, and conditions, expressed or implied, written or oral, of any nature with respect to the subject matter herein.
- The expressed terms control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms herein.
Signature And Date
The Partners hereby agree to the terms and conditions set forth in this Agreement and such is demonstrated throughout their signatures below:
FIRST PARTNER
SECOND PARTNER
Related Proposals and Templates
Download our Business Partnership Agreement
The implications of not using a business partnership agreement with partners can be catastrophic to your business. That’s why we’ve created a simple template to help protect your business.
