Free Business Partnership Agreement Template
Entering into a business partnership is a major decision that can shape the trajectory of your venture. One of the key steps you should take to protect all parties involved is drafting a comprehensive Business Partnership Agreement. On EasyLegalDocs, you can easily download a free Business Partnership Agreement template to make this process more straightforward.
What is a Business Partnership Agreement?
A Business Partnership Agreement is a legally binding document that defines the framework within which the partnership will operate. This Agreement spells out everything from the purpose of the business to how profits and losses will be distributed, the roles of each partner, and the procedures for resolving disputes.
Why You Need a Business Partnership Agreement Template
In the absence of a clear Agreement, misunderstandings are likely to arise. A Business Partnership Agreement template is beneficial because it:
- Minimizes risk: Pre-emptively addresses possible business challenges.
- Sets expectations: Outlines responsibilities, contributions, and benefits.
- Legal protection: Provides a legal fallback in case of disputes.
How to Write a Business Partnership Agreement: A Step-By-Step Walkthrough
So, you’ve decided to download our Business Partnership Agreement template. Excellent choice! Now comes the critical part: customizing it to suit the unique requirements of your business. Let’s dive into a step-by-step walkthrough to help you get the most out of your Agreement.
Start with the Basics: Title and Introduction
Your Agreement should start with a title that explicitly states its purpose, such as “Business Partnership Agreement.” Following the title, introduce the parties involved as “Partner A” and “Partner B,” detailing their respective locations. These are the entities entering into the contract, collectively referred to as “the Partners.”
Define the Purpose of the Partnership
Be specific and clear about the partnership’s objectives and the types of business activities that will be carried out. This helps to set expectations and limits on what the partnership will focus on.
Specify the Duration
Clearly indicate the length of time the partnership will last. Whether it’s an indefinite period or fixed term, state it clearly to avoid future confusion.
Set the Business Location
Your Agreement should specify the principal place of business. This information is critical for legal and tax reasons. Remember, any change in location will require an amendment to the Agreement.
Discuss Capital Contributions
Identify the initial capital each partner will contribute. This can be in the form of money, property, or services. Be as detailed as possible to avoid disputes later on.
Define Distribution of Profits and Losses
Here, you’ll indicate how profits and losses will be distributed among the partners. This is often based on the ratio of capital contributions but can be adjusted as per mutual agreement.
Outline Management and Voting Procedures
Determine how decisions will be made within the partnership. Will each partner have an equal say, or will voting power be determined by the percentage of ownership? The Agreement should make this crystal clear.
Plan for the Unexpected: Death or Departure of a Partner
Life is unpredictable. Your Agreement should outline what will happen if a partner dies or wishes to exit the partnership. Whether the remaining partner has the right to buy out the other’s share or if the partnership will be dissolved, specify the procedure.
Dispute Resolution and Governing Law
Clearly indicate how conflicts will be resolved, whether through arbitration, mediation, or another method. Also, mention the laws of which jurisdiction will govern the Agreement.
Concluding the Agreement
To make the Agreement legally binding, it must be signed and dated by all parties involved. Each partner should also print their name for clarity.