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PARTNERSHIP AGREEMENT
THIS PARTNERSHIP AGREEMENT (the "Agreement") made and entered into this ____ ________________ ________ (the "Execution Date"),BETWEEN:
____________________________ of ___________________________________________________________________, and ____________________________ of ___________________________________________________________________(individually the "Partner" and collectively the "Partners").
BACKGROUND:
IN CONSIDERATION OF and as a condition of the Partners entering into this Agreement and other valuable consideration, the receipt and sufficiency of which consideration is acknowledged, the parties to this Agreement agree as follows:
Partner
Contribution Description
Agreed Value
____________________________
IN WITNESS WHEREOF the Partners have duly affixed their signatures under hand and seal on this ____ ________________ ________.
_____________________________________________________(Partner)
Last Updated January 7, 2025
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A Partnership Agreement is a contract between two or more business partners in a for-profit general partnership. It outlines their rights, responsibilities, and capital contributions and establishes rules for their business, such as the profit and loss distribution.
A Partnership Agreement is also known as a:
You can use our Partnership Agreement template for businesses in England, Scotland, Wales or Northern Ireland.
All owners of general partnerships should use a Partnership Agreement.
Two or more people or companies can start a business as a general partnership. Partnerships can involve any mix of individuals and business entities. For instance, two businesses can come together to form a partnership.
It’s important to note that each partner in a general partnership is equally liable for the debts, obligations, and actions of the partnership and the other partner(s).
Utilising a Partnership Agreement is crucial for all general partners to outline their terms, rights, and responsibilities. Also, it establishes a clear understanding of the partnership's operations and governance.
A partnership doesn’t have to be formally created like other types of companies. Therefore, a Partnership Agreement isn’t legally required. If two or more people begin working together for profit, the Partnership Act 1890 will apply by default.
However, not everything in the Partnership Act 1890 will suit the needs of a modern partnership, so it’s essential that partners define suitable rules in a Partnership Agreement. It minimizes the potential for disputes between partners. Similarly, most businesses create a Business Plan despite it not being required.
Even though it’s not legally required to use an agreement, partners still have to register their partnership with HM Revenue and Customs (HMRC).
A comprehensive Partnership Agreement should include the following information:
Joint ventures and partnerships both involve collaboration between two or more parties, and the legal distinction between the two is not precise.
A partnership may be characterised as a long-term business with a range of activities and interests. The relationship between the partners is close and based on trust. There is a pooling of resources such that a partnership has a beneficial interest in any assets contributed to the partnership by individual partners.
A joint venture may be characterised as a short-term, goal-oriented project between stakeholders who are not necessarily conducting “business in common.” The members of the venture enter into a Joint Venture Agreement may contribute resources, expertise, assets or personnel while maintaining separate assets and business interests outside of the joint venture.
To amend a Partnership Agreement, partners may use a Contract Addendum, also known as an Amending Agreement. However, all partners must agree to and sign the amendment to do so.
Partners may need to amend their Partnership Agreement for various reasons, including:
When a partner wants to leave a partnership, that partner serves the other partners with a Notice of Withdrawal from Partnership.
An example would be selling and assigning one's partnership interest to another party to retire. Note that the remaining partners' consent is required to assign more than just an economic interest in the partnership.
On the other hand, if the other partners need to remove a particular partner from the partnership for any reason, they can do so without that partner's consent as long as that is allowed in the Partnership Agreement.
Breaching a Partnership Agreement refers to one or more partners violating or failing to comply with the agreement’s terms. Contract breaches can lead to strained relationships, loss of trust among partners, and potential legal consequences.
A breach can occur in various ways, such as:
Resolving a breach typically involves communication, negotiation, and potentially seeking legal remedies to enforce the agreement terms or seek damages for any harm caused. A Partnership Agreement may specify how the business will resolve disputes (e.g., mediation, arbitration, etc.).
Partners may have no other option besides dissolving their business if a breach cannot be resolved.
Dissolving a Partnership Agreement means formally terminating the partnership and bringing its operations to an end.
It involves ending the legal relationship and responsibilities between the partners, ceasing business activities, and settling any remaining obligations or assets of the partnership.
To dissolve a Partnership Agreement, follow these steps:
If a Partnership Agreement states that the business partnership ends on a specific date, it will automatically dissolve on that date.
Sample
Partnership Agreement
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