A partnership is a common form of business that is generally very easy to set up. While state laws may vary, the partners in a general partnership usually do not need to file any formal paperwork with the state to create the business---although the business still needs to comply with any required business licenses and permits. To define the rights and responsibilities of each partner, the business should draft a partnership agreement that binds the partners together contractually.
- Skill level:
- Moderately Challenging
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Title the document "Partnership Agreement of (Name of the Partnership)." Include a statement of the date, such as "On (date), the undersigned partners entered into this partnership agreement. The partners state as follows:"
List any "recitals." Recitals help provide context to a contract; they give a short background as to how the partners came together and what they hope to accomplish through the partnership.
List the major sections of the agreement. General partnerships usually have sections devoted to issues such as the rights and responsibilities, funding and contribution, management, compensation and dispute resolution/partnership withdrawal procedures.
Break each major section into smaller subsections. Under the general provision section, for example, you could have subsections for the name of the partnership, its duration of the partnership, its purpose and its principal place of business.
Draft the terms of each subsection in clear and concise language. Provide copies to the partners for review and revision as necessary. Include space at the end of the agreement for each partner to sign and date the contract.
Tips and warnings
- You are generally free to draft your partnership agreement as you see fit. While your partnership agreement is unique to your business, you can benefit from reviewing existing agreements and templates. It may help to use a checklist to ensure that you account for every major aspect and nuance of the agreement. If you are unsure about the effect or wording of a particular provision, seek legal assistance to help resolve any problem.
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