FREE 7+ Sample Business Partnership Agreement Templates in PDF | MS Word | Google Docs | Pages

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What Is a Business Partnership Agreement?

A business partnership agreement is a legal contract between two or more business partners. It sets out specific guidelines for the running of an organization and the duties of each partner. Many business partners use a business partnership agreement to manage disputes, delineate responsibilities, and distribute profits or expenditures. For any business relationship in which two or more individuals own a stake in the company, a business partnership contract should be created, as these legal arrangements could offer guidance in more difficult times.

How to Make a Business Partnership Agreement?

Business agreements are very much useful when it comes to a business partnership. Many business partners are using this contract to ensure that both partners know their obligations to the company. Also, it can strengthen their relationship as partners. But as the author of the agreement, are you sure you are doing the right way? Ensure that you’re on the right track by including these points:

1. Ownership Percentage

A business partnership contract must state the ownership percentage of each partner, making each partner’s stake in the organization clear. Without such, it can cause confusion between the two and might be the start of the conflict. So when making a contract about a business partnership, ensure to put who owns what percentage of the business.

2. Business Operations and Transactions

When creating a business partnership agreement, don’t forget to include all the business operations and transactions. Your contract should explain which activities or operations will engage in and which will not. Without such, both parties would not be aware which of them can give the company many profits and which does not.

3. Decision-Making Process

In your contract or agreement, you must outline the responsibility of each partner in the decision-making process. It includes who has the corporation’s financial control and who has the authorization to add new partners. Also, include the details on how you distribute the profits and losses among partners.

4. Liability

The contract should restrict the liabilities facing each partner if the business partnership is established as an LLC. A partnership contract can be paired with other files, such as articles of incorporation. Thus, a business partnership contract alone is not adequate to entirely cover the parties from liability.

5. Dispute Resolution

A dispute settlement or resolution process should include in any business partnership deal. Disagreements are a common feature of doing business together, even if both partners are best friends, relatives, or husbands.

6. Business Dissolution

A business partnership contract should specify how separation should proceed if the partners wish to dissolve the business. You must also put any continuation or succession plans if either of the partners withdraws from the company.

FAQs

Knowing the functions of a partnership contract can save you from misunderstanding and confusion. However, knowing the purpose of your partnership contract is not enough. You also have to learn and understand how to make it. You can use our downloadable sample templates as your guidelines when making such contracts. Download it now to get started!