Question: What Should be Included in a Partnership Agreement?
A partnership agreement sets out all the terms and conditions agreed to by the partners. In this document, every possible contingency is included. Here is a list of questions to be asked when preparing a partnership agreement.
Answer:
A partnership agreement should include the following information:
- Name of the Partnership
- Name the partnership is doing business as (if different)
- Term (lenth) of the partnership
- Purpose of the partnership (also might include partners’ goals)
- Contributions of each partner, in cash, deferred contributions (installments), property (including intellectual property), and service.
- What happens if a partner fails to make initial contribution
- Additional future contributions
- How profits and losses are distributed (equal, unequal, percentages, etc.)
- Draws to partners (how determined, limitations, when may draw)
- Retention of profits for business needs
- Salaries of partners
- Management powers and duties, including skills contributed, hours of work
- How decisions are made
- Financial matters, including periodic accountings, as requested by a partner
- Power to borrow money on behalf of partnership
- Power to authorize expenses, signatures required
- Meetings
- Maintenance of records
- Partner time off, including leaves of absence, vacations, sick leaves
- Outside business activities (permitted, restricted)
- Ownership of business assets
- Transfer of a partner’s interest
- Sale of partner interest to partnership
[li[Buy-sell agreement (specific buy-out methods)
- Continuity of partnership business when a partner leaves, dies, is terminated
- Non-competition clause
- Expulsion of a partner from the partnership
- Mediation and arbitration
- Amending partnership agreement (procedure
- Admitting new partners
- Adherence to state law
- Severability
