In laymen’s terms, a “partnership agreement” usually refers to any written document between two or more individuals who want to run a venture together.
While it may not be one of the more fun aspects of starting a new business (you’d rather spend your time coming up with a name and logo, designing a website, building an app, or pitching your great idea to friends and investors), it is absolutely one of the most important things you and your partner should do before investing any time and money in the venture.
A well-written legal contract is mandatory for any business partnership so that the parties can clearly communicate their understandings for how things will be owned and managed between them. The agreement should be able to deal with every possible situation where there might be confusion, disagreement, or change as far as the management and operation of the business.
First, however, an explanation on the correct legal terms for the kind of written business agreement we are talking about:
No matter what your choice of entity, the written agreement between the owners of a business should cover these areas:
This crucial business document should be prepared when you start your business, and an attorney can be immensely helpful to make sure you include all-important “what if” questions and issues. A DIY partnership agreement risks not getting the wording right, and a poorly worded contract may be worse than none at all.
Even if you do not use an attorney to draft your document from scratch, spend the time putting something together that covers all the topics summarized above and then invest in having an attorney look it over once it’s done.
At the Law Offices of Daniel T. Goodwin, our attorneys have drafted, reviewed and negotiated hundreds of “partnership agreements” between business owners. We also have decades of experience litigating a wide range of disputes between business owners, which allows us to prepare comprehensive legal documents that will protect you in all those scenarios.