A business partnership agreement is an agreement among several individuals, which sets forth the terms of association. These terms include roles and duties of each partner, distributions of gains and losses and liability. It is important that when creating a partnership arrangement, due consideration be given to each of these areas.
Types of business partnership agreements include those for general, limited and limited liability partnerships. A general partnership exists between two or more people who share equally in the liability of the company. This unlimited liability extends to not only the partner’s ownership share, but also their personal assets. A limited partnership limits the liability of the individual partners to their partnership interest. A general partner who assumes all liability manages the limited partnership. The limited liability limited partnership is a newer form that by election allows the general partner to limit their liability.
A business partnership agreement will have provisions for the name, time, and business purpose of the partnership. It also spells out the amount of contribution to be made by the individual partners. Finally, provisions must be made for the transfer of partnership interests and dissolution upon death or disability of a partner.
A buy-sell agreement is an arrangement that allows for the purchase of a partner’s shares from their heirs. This is used as a way to continue the business of the partnership in the event of death, disability or divorce. The buy-sell identifies funding used to purchase the departing partners interest and redistributes the interest among the remaining partners.
Consult with a legal professional with expertise in drafting business partnership agreements. Although there are template forms that are available in office supply stores, they may not be adequate. There are however places on the Internet that can assist in drafting a state-specific agreement.
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