Partnership Agreement Information
What is a General Partnership Agreement?
A General Partnership Agreement, also known as a Business Partnership Agreement or Partnership Contract, is a form that establishes the rights and responsibilities of each partner in a for-profit business partnership, as well as the profit and loss distribution of each partner.
You can use LawDepot's Partnership Agreement within England, Wales, Northern Ireland, or Scotland.
Why do I need a Partnership Agreement?
It's important to have a written Partnership Agreement because it sets up all the rules, responsibilities, and financial details of a business partnership and its general partners.
Creating a written contract also lessens the possibility of disputes between partners at a later date because the rules for the partnership were previously agreed to and signed by all the partners.
What is capital contribution?
In a partnership, each member has contributed to the equity of the company in the form of capital. Capital contributions could include cash, property (office space), resources (equipment etc.), or services.
What is profit and loss distribution?
Profit and loss distribution is how the earnings and losses will be divided amongst the partners. It can be divvied according to following methods:
- Equal share: each partner gets equal supply of profits, and incurs equal liability for losses.
- Fixed per cent: each partner gets a specific percentage (fixed proportion) of gains and losses.
Creating your Partnership Agreement:
To create your Partnership Agreement, you should include the following things in your contract:
- Partnership start date, address, name, and purpose
- Contact information and duties for each general partner
- Description of partner capital contributions
- Profit and loss distribution (equal share or fixed per cent)
- Rules regarding the admission of new partners, withdrawal of existing partners, and partnership dissolution
- Accounting methods, and annual report details
- Who is responsible for day-to-day management of the business
- When meetings are held, voting rules, and how decisions will be made, including which decisions require unanimous consent from all partners
Partnership Admission, Withdrawal, and Dissolution
Admitting New Partners
In a Partnership Agreement, partners should agree if and how to admit new partners in the future, as well as if it will require a vote to make the decision.
Withdrawing from a Partnership
At some point a partner may decide to withdraw from a general partnership either voluntarily or involuntarily, for reasons such as retirement, incarceration, incapacitation, etc.
Similar to admitting new partners, general partners should address how to withdraw from the partnership, including if there is notice period for withdrawing partners, and if the partnership will dissolve when a partner decides to exit.
Dissolving a Partnership
It is recommended that general partners include clauses about dissolution (ending the business partnership), specifically whether a vote is required to end the business, and how property and assets will be divided in the event of dissolution.
Other Forms You May Need: