Partnership Agreement Template

Have you and your partner joined forces to create a new business partnership? If so, check out the below given simple template that can help you to create your own partnership agreement, which is an essential document in any partnership.
BusinessZeal Staff
A partnership agreement is a contract between two or more parties that come together to create a new business partnership or formalize an existing one. The main purpose of this agreement is to put the terms and conditions of the partnership in writing so that there is no confusion about the rights and responsibilities of the parties involved. In short, the agreement protects your business rights and in conditions where some conflicts or minor misunderstandings arise, you can handle them well without being at loss.

It is very important to note that the terms and conditions of such an agreement may vary with the type (general, limited, limited liability) and nature of the partnership. State-wise variations can also exist. So it is difficult to come up with a single standard format that can be used by all.

The following is a basic partnership agreement template for reference purposes. It is always advisable to consult a legal expert for drafting the agreement, as per your requirements and the laws of the applicable jurisdiction.
General Partnership Agreement

This Partnership Agreement is made on ............................. (date) between ............................. (name and address), ............................. (name and address) and ............................. (name and address), hereinafter referred to as partners, will work together in accordance with the terms and conditions set forth below.

1. The Partnership will be known as ............................. (name) and the main office and principal place of business shall be located at ............................. (location address).

2. The Partnership shall engage in ............................. (purpose).

3. The Partnership shall commence from ............................. (date) and shall continue until dissolved by mutual agreement of the partners or by operation of the terms and conditions of this agreement.

4. The initial capital contribution of the partners are as follows:

Partner 1. $.............................
Partner 2. $.............................
Partner 3. $.............................

a. Each partner must deposit his initial contribution at the ............................. (bank name and address), on or before ............................. (date).

b. No partner is entitled to withdraw his contribution from the capital of the Partnership, without the written consent of the other partner.

c. The partners are not entitled to any interest on these contributions.

d. Voluntary contribution can be a made by an individual partner, only with the consent of the other partners.

5. The profits and losses shall be shared equally by the partners. (If the proportions are different, then state them accordingly.)

6. Each partner shall devote time and attention needed to promote the interests of the Partnership. No partner is entitled to salary or any type of compensation for the services rendered to the Partnership. (if there is a provision for salary/compensation, state them.)

7. Each partner shall maintain an individual capital account as well as an income (current) account. The initial and subsequent contributions made by a partner shall be credited to his capital account. The profits and losses shall be credited or debited from the income account of each partner, at the end of each fiscal year. If there is no credit balance in the income account of any partner, the losses shall be charged to his capital account.

8. The partners have to maintain proper book of accounts at their main office. An accurate account of the profits, losses, expenditures and assets must be entered in these books. The books of accounts shall be maintained on a ............................. (cash or accrual) basis. Each partner shall have access to these books, at all reasonable times.

9. The fiscal year for the Partnership shall end on the ............................. day of ............................., (month) each year.

10. After the close of each fiscal year, the partners shall receive an annual report, including a copy of the Partnership's Federal Income Tax filing, the profit and loss statements and balance sheet. (You may also include other information that will help the partners furnish their income tax returns.)

11. The profits shall be distributed among the partners, in accordance with their respective shares. The amount shall be distributed from time to time, as per the mutual agreement of the partners.

12. The partners shall meet from time to time and discuss the matters related to the control and management of the business. Each partner has equal rights and responsibilities. Decisions shall be taken according to majority voting. Unsolved issues shall be settled with the help of an arbitrator. Any partner can bind the Partnership in contract. But, no partner is entitled to incur obligations in the name of the Partnership, for an amount of more than $............................., without the written consent of other partners. (Anything different must be stated accordingly.)

13. A new partner shall be admitted to the Partnership, only with the consent of all the existing partners. The new partner has to execute this agreement and agree to its terms and conditions.

14. If any of the partners is found guilty of improper conduct that affects the interests of the Partnership business in a negative manner, then he may be removed from the Partnership, by the remaining partners, through majority voting.

15. In the event of death/withdrawal/bankruptcy/retirement/expulsion of a partner, other partners shall continue with the Partnership. (explain your terms and conditions)

16. If a partner withdraws from the Partnership and wants to sell his interests in the Partnership business, he must inform other partners. He is not entitled to sell his interests to a third party, without the consent of other partners. (explain your terms and conditions)

17. In case of death of a partner, others have to purchase the interests of the former within ............................. days or else terminate the Partnership business. If the surviving partner decides to purchase the decedent's interest, he has to provide a formal notice in writing of such decision within the three months after the demise of the decedent partner to either the executor or administrator of the decedent, or one of the known legal heirs of the decedent. (explain your terms and conditions)

18. Buy-Sell agreement: In the event of death, expulsion or withdrawal of a partner, the remaining partners have the obligation to purchase the interests of the former, within ............................. days of death, expulsion or withdrawal. (Provide details about the purchase price, payment, transfer of interest, beneficiaries, and the party to bear the expenses of the agreement)

19. At any point of time, the partners may reach a mutual agreement to terminate the Partnership. In that case, the assets of the Partnership business shall be sold to pay off the liabilities and obligations. The balance amount shall be distributed among the partners, according to their individual share. (explain your terms and conditions)

20. Miscellaneous

a. The notices between the parties, as permitted by this agreement, shall be in writing and served personally or through post to both the official (main location of Partnership business) and the personal address of the concerned partner.

b. This agreement shall be governed and construed in accordance with the laws of the state of ............................. .

c. This agreement shall be amended with the mutual consent of all the partners. Such amendment should be in writing and signed by all the partners.

d. If any provision of this agreement is declared null and void, by a competent court of law, it will not affect the validity and enforceability of the remaining provisions that will stay in full force.

e. This instrument contains the sole and final agreement of the parties, relating to the Partnership and their rights and responsibilities and supersedes all prior agreements.

IN WITNESS WHEREOF, the parties have executed this agreement on this ............................. (date) day of ............................. (month), ............................. (year), in ............................. (city), ............................. (state).
.............................

.............................

.............................

Signature of partners.
To sum up, we can say that partnership agreement is an absolute must for a person who intends to start a business in partnership. This document not only outlines the basic details related to partnership but also protects your rights in case of an argument or dissolution. This is only a sample agreement for general partnership. You must draft your own agreement, as per your requirements. While drafting, special care must be taken to define the terms and conditions relating to profit sharing, tax issues, buy and sell agreement, etc. So, it is better to consult an expert lawyer for this purpose.