What should be in a business partnership agreement!

Discussion in 'Articles & Tutorials' started by Fergal, Jul 15, 2012.

  1. Fergal

    Fergal
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    In general a business partnership agreement should include terms that cover the following;

    • Ownership of the business - percentage shares etc
    • Decision making - how are decisions made in the business, e.g. by majority vote or other method
    • Duties & responsibilities - who is responsible for what
    • Job titles
    • Profit - how are any profits to be distributed
    • Losses - how will you deal with losses, should there be any
    • Calculation of profit and losses - clarification as to how profits and losses are measured
    • Departure - how to handle a situation where one partner wants to leave the business
    • Salaries and pay, if applicable

    Please reply to this thread with anything you feel should be added to this list and I will edit it accordingly.

    Thanks!
     
  2. Jerlene

    Jerlene
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    Well for me, after being hugely taken advantage of, I would need an agreement to between us to come together and make decisions together.
     
  3. Fergal

    Fergal
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    The process for decision making is indeed very important in a partnership Jerlene, it's covered in the second point in the list above.
     
  4. cesspadilla

    cesspadilla
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  5. Mark T

    Mark T
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    You should add a clear and understandable contingency plan for your business. When you have Plan A, you have to make sure you have Plan B at hand and C, and so on and so forth.
    Why is this needed?

    Simply because any business / business partnership ain't easy. There are always risks. So having this kind of business contingency or partnership plan would help you out know how your business could resolve possible risks in the future, as well as as type of creating a powerful risk management for your business.

    Many business fails to recover as some do not have any clear contingency plans - or don't have at all.


    Thanks,
    Mark T.
     
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  6. Businessstrategy

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    According to me, you have added all the essential elements that are required to start a business. But I think the most important factor that is considered for a successful business is planning and strategy. If you work hard to make the strategy according to business needs and requirement of the market, you will definitely get success. Best of luck...just go for it.
     
  7. MarkTaylor

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    A contrarian view here, but there is a case for saying 'nothing' - never go into partnership because it is such a questionable legal status. The concept of Joint and several liability means that each partner is wholly responsible for the actions of others (as I understand it) and this can result in all sorts of problems. Therefore a limited company is a more robust solution. However, Limited Liability Partnerships are now available and may be worth investigating. Taking professional advice is always the best first step.
     
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  8. Kimmy Yong

    Kimmy Yong
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    I would suggest you to include a confidentiality clause in the partnership agreement to make sure your partners do not disclose confidential information to third parties without your consent.
     
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  9. marriott

    marriott
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    You have included all the important points of business partnership agreement. I want to add my point that before business partnership, partners should decide the legal name of partnership. Means, whether they want to use their actual name or business name.
     
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  10. Mark T

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    You should include an agreement on your business goals. It is what makes your business running and continuously operating..
     
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  11. Henry Calvin

    Henry Calvin
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    There are also sometimes when one partner actually wants some of the products that the firm is selling. So it decided by the partners if there would be some kind of a discount, or can the partner just take it for free. There needs to be a rule in the partnership about that too.
     
  12. Patson

    Patson
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    Almost you have covered all the important points of the business partnership agreement. I just liked to add one point that, Plan for future growth by documenting how new members can join the partnership. I think its need to be considered.
     
  13. Sameer shokat

    Sameer shokat
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    Hi there,
    Actually if you sign any agreement before that you will must trust on his partner and also on his thinking or ideas which is beneficial for both of you because business name of trust which is require in any theme of business i mean any level of business like small or big honesty is first priority to manage that business and recognize his personalty with other,s and everything can do after discussing his partner and following his ideas and giving own ideas in that cause your business establish and your trust and relation also gaining .

    Regards:
    Sameer shokat.
     

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