What Is A Partnership Agreement?
A partnership agreement is an agreement between you and your partners. It lays out the framework of the partnership by detailing the duties and obligations of the partners to each other to ensure the partnership is effective.
Why Do You Need A Partnership Agreement?
It’s pivotal to have a written partnership agreement because it sets up all the rules, responsibilities, and financial details of a business partnership. Creating a written partnership agreement lessens the possibility of disputes arising between partners at a later date because the rules for the partnership were previously agreed to and signed by all partners.
This article by Brad Sugars provides a good indication of the kind of pitfalls that can occur between partners so it’s crucial to be prepared for such circumstances.
Withdrawing From A Partnership Agreement
At a certain point in time you may want to withdraw from a partnership. When you draft a partnership agreement you need to consider exiting procedures to the same extent you consider admitting procedures for new partners. You should clarify whether or not there is a notice period for withdrawing from the partnership, and if the partnership will dissolve when a partner decides to exit.
Dissolving A Partnership Agreement
It is recommended that general partnerships include clauses about dissolution (ending the business partnership). Specify whether a vote is required to end the business, and how property and assets will be divided in the event of dissolution.
Why Not To Download A UK Partnership Agreement Template?
It’s no wonder why individuals, businesses and NGO’s type into search engines ‘download UK partnership agreement template’. Downloadable services offer compelling value. However, don’t get ahead of yourself. Although the services may be free or cheap now, they could cost you a lot of money down the road, be ineffective and in some cases cause problems in court.
For partnership agreements in particular, there is always something unique about the situation that requires the sophistication of an experienced lawyer. Add to that the fact that partnership agreement templates may be out of date, inaccurate or wrong and this could be the sole cause of your partnership falling apart.
What To Include In A Partnership Agreement?
A standard partnership agreement typically includes:
- A partnership start date
- Partners’ names, addresses, contact information and purpose
- Contact information
- Description of partner capital contributions
- Profit and loss distribution
- Rules regarding the admission of new partners
- Accounting methods and annual report details
- Responsibility for the day-to-day management of the business
- Procedures for when meetings are held and voting rules
- Decisions procedures, including which decisions require unanimous consent from all partners
- Dissolution procedures, including how property / assets may be divided in the event of dissolution
Need more qualified advice on partnership agreements and protecting your business arrangement? We can help you with a free Startup Legal Session. Book by clicking the image below.