Although everyone wants to handle the business by his own and decide without concerning anyone else, but sooner or later, everyone needs a partner if he wants to improve the business or start a new project. This explains why companies do partnership when they were doing fine before. When two or more partners do a partnership together, they need to sign a legal document to limit the authorities of each one of them and to decide which one decide and which one will handle the external matters. That legal document is called a partnership contract and it’s an essential part of doing a business together.
Here is preview of this Free Partnership Contract Template created using MS Word,
Essential elements that a partnership contract must have:
What will happen if one partner decides to leave:
this point ensures that if one partner wants to leave or can’t continue the partnership anymore, the other one doesn’t suffer. As the main purpose of creating this contract is to make this partnership beneficial for the both parties and when one decides to leave, it’s a must that the other will suffer and won’t be able to face the consequences on his own for a while. So if a partner leaves, he or she is required to fulfill the conditions he agreed in the contract.
What happens if one partner dies:
this section includes the possibility of a partner’s death as the life is so uncertain and unpredictable, it’s impossible to stay on the track as you don’t know what will happen in the next moment or what will be the situation after a week or month or even a year. It’s not that uncommon that one partner dies and the other faces the bad situations after his death. In order to run the business smoothly even after death of one partner, it’s essential to put this section in the contract so that the remaining partner(s) know what kind of rights they have after the death of their companion.
What happens if one partner wants to change the conditions of the agreement:
this makes it clear for both parties that although they are agreed to mutual agreement at this moment but it’s not uncommon that eventually or after some time, one of them will want to change the contract as he or she is not getting enough benefits. If that happens, the other partner should have a clear knowledge about the rights he has and steps he can take to renew the contract.
In case both partners don’t agree on a big issue:
although they both are agreed to the contract at this time but what if something big comes in the future that was not included in the contract and both partners don’t know how to decide or worst case scenario if they both don’t agree on mutual terms, what will happen to the project they are going to do together or how will they decide in that kind of situation. This section explains all that and makes it possible if they are required to contact a third party or anything like that.
How to prepare a partnership contract/agreement:
- State the name of both partners and the official name of the partnership at the top of the document.
- First of all the contract should include the money, assets and other goods that the both partners will be sharing in the contract. Here the percentage of each partner based on his investment is also mentioned.
- Also it’s an essential part of this kind of agreement that the duties and authorities of each partner are described here to eliminate the future conflicts. This also clears if only one can take a big step or it needs the approval of each partner.
- If the partnership is open means after the contract, other members can joint too, it’s essential to state the rules for that here.
- Also the conditions or circumstances are needed to describe here after that the partnership will be dissolved or the contract will expired.