The Partnership Agreement: Elements, boilerplate template, and optional clauses
What is a Partnership Agreement?
A Partnership Agreement is a legal contract between two or more parties who agree to carry on a business venture together for profit. It outlines the roles and responsibilities of each partner, the terms and conditions of the partnership, and the distribution of profits and losses. It also sets out the procedures for decision-making, dispute resolution, and the dissolution of the partnership.
What are the common elements of a Partnership Agreement?
- Purpose: This section outlines the purpose of the partnership, which can include a description of the business or project that the partners will be working on together.
- Contributions: This section outlines the contributions that each partner will be making to the partnership, which can include financial contributions, intellectual property, and other resources.
- Allocations and Distributions: This section outlines how profits, losses, and other benefits will be allocated among the partners. It may also include provisions for how distributions will be made and how the partnership will be dissolved.
- Management and Control: This section outlines how the partnership will be managed and controlled, including the roles and responsibilities of each partner, decision-making processes, and voting procedures.
- Term and Termination: This section outlines the length of the partnership and how it can be terminated, including provisions for dissolution, withdrawal, and expulsion of partners.
- Confidentiality: This section outlines how confidential information will be handled by the partners, including provisions for non-disclosure and confidentiality agreements.
- Dispute Resolution: This section outlines how disputes between partners will be resolved, including provisions for mediation, arbitration, or litigation.
- Governing Law: This section outlines the governing law of the partnership agreement, which can include provisions for how disputes will be resolved and how the agreement will be enforced.
It’s important to note that this is just a sample of the common boilerplate language that may be included in a Partnership Agreement. The specific language and provisions included in the agreement will depend on the unique needs and circumstances of the partners and their business or project. It’s always a good idea to consult with a qualified attorney when drafting a Partnership Agreement to ensure that it is tailored to your specific needs and complies with applicable laws and regulations.
The following boilerplate Partnership Agreement template can be used on SimpleSignRequest.com
This Partnership Agreement (the “Agreement”) is made and entered into on [DATE] by and between [PARTNER 1 NAME] (“Partner 1”) and [PARTNER 2 NAME] (“Partner 2”).
The purpose of this partnership is to [BUSINESS_OR_PROJECT_DESCRIPTION].
Partner 1 will contribute [LIST OF CONTRIBUTIONS] to the partnership, and Partner 2 will contribute [LIST OF CONTRIBUTIONS] to the partnership.
- Allocations and Distributions.
The partners agree that profits and losses will be allocated as follows: [OUTLINE THE ALLOCATION OF PROFITS AND LOSSES]. The partners also agree that distributions will be made [DESCRIBE HOW DISTRIBUTIONS WILL BE MADE].
- Management and Control.
The partners agree to manage and control the partnership as follows: [OUTLINE THE ROLES AND RESPONSIBILITIES OF EACH PARTNER, DECISION-MAKING PROCESSES, AND VOTING PROCEDURES].
- Term and Termination.
This partnership shall commence on [START DATE] and shall continue until terminated by mutual agreement of the partners or by operation of law. The partners may terminate this partnership at any time by giving [NOTICE PERIOD] days’ written notice to the other partner(s).
The partners agree to maintain the confidentiality of all proprietary and confidential information related to the partnership, and to sign any necessary confidentiality or non-disclosure agreements.
- Dispute Resolution.
In the event of a dispute between the partners, the partners agree to attempt to resolve the dispute through mediation. If mediation is unsuccessful, the partners agree to submit the dispute to binding arbitration.
- Governing Law.
This Agreement shall be governed by and construed in accordance with the laws of [STATE], and any disputes arising under or in connection with this Agreement shall be resolved in accordance with the laws of [STATE].
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above.
PARTNER 1 SIGNATURE: [PARTNER_1_SIGNATURE]
PARTNER 2 SIGNATURE: [PARTNER_2_SIGNATURE]
What are some common clauses one might want to include in their Partnership Agreement?
- Purpose of the Partnership: This clause outlines the reason for the formation of the partnership, the specific goals and objectives that the partners hope to achieve, and the scope of the partnership.
- Contributions: This clause specifies the contributions that each partner will make to the partnership, including capital contributions, assets, and expertise.
- Profit and Loss Distribution: This clause outlines how the profits and losses of the partnership will be allocated among the partners, which may be based on their contributions, ownership percentages, or other factors.
- Management and Decision-making: This clause specifies how the partnership will be managed and decision-making will be made, including the roles and responsibilities of each partner and the procedures for making major decisions.
- Dispute Resolution: This clause outlines the procedures that the partners will follow to resolve disputes that arise during the course of the partnership, such as mediation, arbitration, or litigation.
- Term and Termination: This clause specifies the duration of the partnership and the circumstances under which it may be terminated, such as by mutual agreement, expiration of the term, or dissolution.
- Non-compete and Confidentiality: This clause may prohibit partners from competing with the partnership or using confidential information for personal gain or for the benefit of other businesses.
- Succession Planning: This clause specifies what will happen to the partnership in the event that one partner dies, becomes incapacitated, or wishes to leave the partnership.
- Intellectual Property: This clause specifies how intellectual property, such as patents, trademarks, and copyrights, will be used, shared, or licensed by the partnership.
These are just a few examples of the clauses that you might want to include in a Partnership Agreement. The specific clauses that you choose will depend on the nature of the partnership, the goals of the partners, and the legal requirements of the jurisdiction in which the partnership is formed.