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What to include in your partnership agreement

With any business venture, having the right paperwork in place could help lessen the likelihood of issues. If you hope to enter into a partnership in order to start a new business, creating a partnership agreement could better ensure that you and your future partners understand each other's expectations. With everyone on the same page, your operations may have a better chance of running smoothly.

If you have never entered into a partnership before, you could have questions about what to include in a partnership agreement. The exact terms could depend on your specific needs and desires from the business relationship, but some common terms often go into partnership contracts and could act as a solid starting point for the creation of your agreement.

Obligations

One of the biggest areas you will certainly want to cover in your agreement relates to each partner's obligations, contributions and responsibilities. By having the terms of who will do what covered in writing, you and your partners may have a lower chance of any confusion over duties taking place. Additionally, you can ensure that each partner feels comfortable with his or her allocated responsibilities.

Decision-making power

When it comes to a partnership, a common understanding exists that each party involved will work together in order to meet a mutual goal. However, your agreement may want to dictate who has the ability to make decisions and under what circumstances. For instance, you may want to decide whether each partner must have a say before any business moves take place or whether consultation and formal agreement between all partners must only occur for major decisions.

Dispute resolution

As with any type of relationship, everyone involved in your partnership may not always agree. Because the possibility of disagreements and reaching an impasse exists, you may also want to include terms in your agreement that detail how to resolve any potential disputes. Business-related issues can often call for legal intervention, and rather than heading straight for litigation, you may prefer to stipulate that other resolution methods come first.

Legality

One important aspect of your partnership agreement that you may want to ensure relates to its legality. If you do not create your contract through the correct means, applicable authorities may not consider it legally binding. Therefore, you may wish to determine the proper steps for creating this type of agreement and any other contracts as you form your business.

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