If something happens to a partner, if there is a dispute between the partners or if there is a change in the partnership, everyone needs to know „what if“. A partnership agreement is the best way to ensure that the commercial – and personal – part of the relationship can survive. Individuals and businesses often make the mistake of not creating a partnership agreement before doing business together. Because of an existing strong relationship, the partners cannot imagine that the future holds anything else. Even family businesses rarely recognize the need for a partnership agreement. But families, like all other business partner relationships, are not immune to disagreements or even lawsuits against each other. A partnership agreement can eliminate these problems by clearly defining the individual roles of the partners and the specificities of the business relationship. A written agreement allows partners to agree in advance on important decisions such as dispute resolution. One of the most important provisions of any partnership agreement is how disputes are handled. Partners may include in their agreement a dispute resolution provision that requires mediation followed by binding arbitration. Without this in writing, there is no way to force mediation or arbitration of disputes and avoid costly and lengthy disputes.
Business owners enter the business full of optimism and good intentions. However, disputes between trading partners are all too common and can destroy the entire operation. A well-drafted partnership agreement can protect owners` investments, significantly reduce business disruption, and effectively resolve disputes as they arise, saving owners tens of thousands of dollars in legal fees in the future. The more information contained in the agreement, the better prepared each partner is for events that could occur as long as the defined information complies with state and federal laws. For example, you cannot specify that each partner is only responsible for decisions that they approve individually. Under the Uniform Partnerships Act, each partner is responsible for his or her own actions, but is also responsible for the actions of other partners and employees. If you need help creating a partnership agreement, contact a lawyer or download a template from a legal website. Partnership agreements are a complementary document used in addition to the legal forms of a State required for the establishment of partnerships.
Although your partnership agreement is a very important document, do not submit it to your state. Partnership agreements contain the defined terms and conditions for ownership, partnership actions, profit sharing, corporate governance and operational details. Drawing up a partnership agreement with specific provisions allows partners to develop and operate their business according to their own goals and desires, rather than being limited by standard provisions of the law as regulated by the state in which the company operates. .