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Farm Partnership Agreement

Updated March 23, 2017

A farm partnership agreement is a legally binding contract between two farmers who want to start a farming business together. The farmer partnership agreement is established to outline the terms and guidelines of the farming business. It is also created to legally protect both farmers in terms of the assets they each contribute to the business. In essence, the agreement is created to avoid any future issues or disagreements between the partners.

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Identifying the Farmers

A farm partnership agreement should include the names of the two farmers who will be joining together to create the new farming business. The legal names should be used in the agreement so it can legally be used in court. The partnership agreement should also describe the property that will be used as the main farm for the partnership, including the name of the farm and the physical address. If the farm is owned by one of the partners, the agreement should identify the rightful ownership.

Partnership Activation

The legal activation date of the farmer partnership should be described in the agreement. It will have a set starting date and should outline whether the partnership is a limited partnership that will end once a collaborative project is completed or whether it is a long-term partnership. If the duration of the partnership is known in advance, it should be specified up front. If it is undetermined, the agreement should note this fact and detail the specific procedures that must be performed to break up the partnership. These procedures for dissolving the partnership should address what happens in the even of the death of a partner, and the protocol for the transfer of rights from one farmer to another.

Capital and Assets

Since two farmers are coming together to create a new farming business, the farmers may contribute some personal assets to help the business get started. These assets can include money, farm property, storing houses and buildings, farming equipment and machinery, grain and feed supplies, and livestock. Since each farmer may bring in a different percentage of assets, the assets should be outlined in the agreement to protect the rightful ownership of the assets for each farmer. In this regard, any losses the farm may experience during operations should also be addressed so both farmers know how to deal with the losses.

Ownership and Salaries

While the farmers may have equal ownership of the partnership business, it could be divided unevenly if one farmer contributes more labour or attention to the business. Each individual's monthly or annual salary should be divided according to the ownership rights and the responsibilities of each farmer. This is an especially important part of the agreement that must be developed in order to ensure that both partners are satisfied with their share of the work responsibilities and profit.

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About the Author

Based in Toronto, Mary Jane has been writing for online magazines and databases since 2002. Her articles have appeared on the Simon & Schuster website and she received an editor's choice award in 2009. She holds a Master of Arts in psychology of language use from the University of Copenhagen in Denmark.

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