A Written Partnership Agreement Should Show
As the company grows and expands, so does the need for new ideas, resources, and strategies. Sometimes growth can mean adding a new partner. Plan for these new opportunities in advance in the partnership agreement by defining how new partners will be included in the existing partnership. The same authority to manage. When a partnership is established without a written agreement or with a general partnership contract that remains silent on the issue of administration, RUPA provides that each partner has the same right to manage and manage the partnership activity. Rupa also provides that disputes arising from ordinary partnership activity are settled by a majority of shareholders (each partner having one vote). A well-developed partnership contract can limit and/or split the responsibility for managing the partnership activity and structure the decision notice between the partners in an infinite way. A well-developed partnership agreement should also provide an appropriate means of resolving a deadlock that may include an external consultant making a decision, an arbitrator or, in serious cases, triggering a buy-back clause, so that a partner can unblock the situation by purchasing the interests of another partner without having to resort to costly litigation. And don`t dismiss the need for a partnership agreement because your proposed partner is your good friend. Some of the uoldest breakups in partnerships I`ve heard or seen have happened between friends who thought they knew what their boyfriend was thinking or was going to do.
Remember that in general commercial companies, each partner is co-responsible for all debts/liabilities of the company. Having a lawyer to help you prepare your partnership agreement seems like an expensive waste of time. This is not the case. Remember that if it is not written, it does not exist, so any situation or eventuality in a partnership contract can prevent costly and tedious complaints and harsh feelings between partners. Limited partnerships are made up of partners who play an active role in the management of the business and those who invest only money and play a very limited role in management. These limited partners are essentially passive investors whose liability is limited to their initial investment. Limited partnerships have more formal requirements than the other two types of partnerships. Disclaimer: The information contained in this article and on this website is intended for general information purposes. I am not a lawyer or CPA, and you should talk to your legal and financial advisors before entering into a contract.
Each partner has a personal interest in the success of the company. Because of this personal interest, it is generally accepted that each partner has the power to make decisions and enter into agreements on behalf of the company. If this is not the case for your company, the partnership agreement should describe the specific rules regarding the power given to each partner and how business decisions are made. To avoid confusion and protect everyone`s interests, you need to discuss, determine and document how business decisions are made. One of the first tasks you and your partners will tick off your to-do list is to make a decision about your company name. The company name may reflect the names of the partners or have a fictitious name. In both cases, your company name must be registered with your state. Let`s say you`ve done a full search for the name you chose, the registration confirms that no other business with the same name exists, and prevents others from using your name.