How Do You Make a Partnership Agreement?

Category: Blog, Type: Management

How Do You Make a Partnership Agreement?

Most start-up organizations prefer to have a business partner to share in management and costs of running a business partner. However, partnerships are not just limited to companies. Non-governmental companies with a usual objective can form a partnership to fulfill their group's mission. Partnerships among accrediting institutions and government agencies are also not rare.

In any form of partnership, there must be an agreement. If you're planning to partner with individuals or another business entities, these are the things to do.

- Put the agreement in writing. Any form of agreement, however noble, won't be legally binding unless it is written and signed by the parties involved. Make sure that each member's responsibilities and rights are fully identified.

A written agreement guides the partners in implementing policies and outlines how the organization will proceed in future.

- Supply a detailed overview of parties involved. Be certain to in a accurate way recognize the names of parties involved in partnership, plus their contact details. This is useful in terms of archiving and in case there're legal ramifications in future. Be certain to in a accurate way recognize each party's representative and his/her designation. In addition, contain names of witnesses to agreement.

- Enter the name of partnership. This is necessary if you're entering into a business partnership. Come up with a appropriate name that's pleasant for both parties. It can be a combination of names or a fictitious name. However, ensure your business name is unique.

- Recognize each party's responsibilities. Supply a detailed overview of degree of division of labor among the two parties. Determine how much is invested and how much control and power each member has. Write down how responsibilities are divided between partners.

- Recognize the Partnership's Benefits. Supply a detailed breakdown of allocation of benefits allowed for each partner, plus the schedule and frequency of returns. State how much authority each member of partnership has.

- Add extra information. Write it down if you've plans to expand the business in future, containing the process for accepting extra members.

Also contain a section describing how to deal with instances where a member withdraws from the partnership or a partner dies suddenly. Indicate how the transfer of rights and responsibility should be handled.

You can also indicate a section on how you try to resolve conflicts and disputes. This is useful if you can't solve a problem.

Finally, add details on how to alter and customize sections of agreement.

- Have a lawyer review the agreement. After signing the agreement with your spouse or partners, you need to hire a lawyer who will review the content. It is also best to have the lawyer ratify or notarize the document. This ensures that you can prevent legal problems in future.

See Also

Category: Blog, Type: Management