Question: What is a partnership agreement?Answer:
A partnership agreement is an agreement between two or more parties who wish to enter into business together in the form of a partnership. The partnership agreement is the defining contractual document that will determine how the partnership will operate. Like any other contract it can be verbal or written – the partnership structure begins as soon as partners begin business operations together – however, it is highly recommended that your partnership agreement is in writing and signed by all parties involved.
A Partnership Agreement should clearly set out the expectations, rights and obligations of each partner. Having a well-drafted Partnership Agreement will reduce the possibility of disputes arising at a later stage. A good contract lawyer should draft the partnership agreement for you, or at least review it and bring to your attention circumstances or scenarios that you may not have considered. This will help create a far more comprehensive Partnership Agreement, which is important for risk management and could potentially save you money and stress down the track.
Each individual partner should seek independent legal advice so as to ensure that everyone is entering into the agreement on fair and equitable terms.