Partnership Agreement Template

Partnership Agreement Template

This Partnership Agreement (the “Agreement”) is made and entered into as of:

Effective Date: [Date]

1. Parties and Formation

This Agreement is by and between the following partners (each a “Partner” and collectively the “Partners”):

• Partner 1: [Partner 1 Full Legal Name], [Address]

• Partner 2: [Partner 2 Full Legal Name], [Address]

• Partner 3 (if any): [Partner 3 Full Legal Name], [Address]

• Additional Partners (if any): [Names and Addresses]

The Partners hereby agree to form a partnership under the name:

Partnership Name: [Partnership Legal Name]

Jurisdiction of Formation: [State/Province, Country]

2. Business Purpose and Principal Place of Business

2.1 Purpose
The purpose of the partnership (the “Partnership”) is to engage in the following business activities:

[Business Purpose / Description of Activities]

The Partnership may engage in any other lawful activities agreed upon by the Partners.

2.2 Principal Place of Business
The principal office and place of business of the Partnership will be located at:

[Business Address]

The Partners may change this location or establish additional locations as they agree.

3. Term of the Partnership

The Partnership will begin on the Effective Date and will continue until dissolved in accordance with Section 14 of this Agreement.

4. Capital Contributions

4.1 Initial Contributions
Each Partner will make the following initial capital contributions to the Partnership:

• Partner 1: Contribution Type: [Cash/Property/Services] – Amount/Description: [Contribution Details]

• Partner 2: Contribution Type: [Cash/Property/Services] – Amount/Description: [Contribution Details]

• Partner 3 (if any): Contribution Type: [Cash/Property/Services] – Amount/Description: [Contribution Details]

4.2 Additional Capital Contributions
No Partner will be required to make additional capital contributions unless all Partners agree in writing. If additional capital is needed and one or more Partners contribute more capital, the Partners may adjust capital accounts and ownership percentages by written agreement.

5. Ownership Percentages, Profits, and Losses

5.1 Ownership Percentages
The Partners’ ownership interests in the Partnership are:

• Partner 1: [Ownership Percentage]%

• Partner 2: [Ownership Percentage]%

• Partner 3 (if any): [Ownership Percentage]%

• Additional Partners: [Ownership Percentage]%

Total ownership must equal 100%.

5.2 Allocation of Profits and Losses
Except as otherwise agreed in writing, the Partnership’s net profits and losses for each accounting period will be allocated among the Partners in proportion to their ownership percentages stated above.

5.3 Distributions
Cash distributions, if any, will be made at such times and in such amounts as agreed by the Partners. Unless otherwise agreed in writing, distributions will be made in proportion to ownership percentages after allowing for reasonable reserves for taxes, operating expenses, and future obligations.

6. Management, Authority, and Voting

6.1 Management Structure
The Partners will manage the Partnership collectively unless they appoint one or more managing partners.

Management Structure:
☐ All Partners manage jointly
☐ Managing Partner(s): [Name(s) of Managing Partner(s)]

6.2 Authority of Partners
Each Partner acting in the ordinary course of business has authority to bind the Partnership in routine matters consistent with the business purpose. Actions outside the ordinary course of business require prior approval as described in Section 6.3.

6.3 Voting and Major Decisions
Routine decisions may be made by a simple majority of ownership interests, unless otherwise agreed. The following major decisions require approval by [unanimous consent / a specified supermajority, such as 75%] of ownership interests:

• Admitting a new Partner;

• Borrowing above a specified limit: [Amount];

• Selling all or substantially all Partnership assets;

• Merging or reorganizing the Partnership;

• Amending this Agreement;

• Dissolving the Partnership.

7. Duties, Time Commitment, and Restrictions

7.1 Duties of Partners
Each Partner agrees to:

• Act honestly and in good faith in the best interests of the Partnership;

• Use reasonable care and skill in carrying out Partnership business;

• Avoid self-dealing or conflicts of interest without full disclosure and consent.

7.2 Time Commitment
Time expectations (choose one):

☐ Partners will devote full-time efforts to the Partnership.
☐ Partners will devote part-time efforts and will reasonably coordinate workloads.
☐ Time commitments are as follows: [Partner-by-partner description].

7.3 Outside Activities and Non-Competition
Unless otherwise agreed, no Partner may engage in a competing business that conflicts with the Partnership’s core activities without prior written consent of the other Partners.

7.4 Confidentiality
Partners will keep confidential the Partnership’s non-public business information, except as required by law or as needed to run the business.

8. Banking, Records, and Accounting

8.1 Bank Accounts
Partnership funds will be held in one or more accounts in the name of the Partnership. Authorized signers for the accounts are: [Authorized Signers].

8.2 Books and Records
The Partnership will maintain complete and accurate books and records of its operations at the principal place of business or another agreed location. Each Partner may inspect the books and records at reasonable times.

8.3 Accounting Method and Fiscal Year
Accounting Method: [Cash / Accrual]
Fiscal Year End: [Month and Day]

9. Compensation and Reimbursement

9.1 Partner Compensation
Unless otherwise agreed, Partners will not receive a salary for their services and will be compensated through their shares of profits. If any Partner is to receive a fixed or variable management fee, bonus, or salary, it should be described here:

[Description of Partner Compensation, if any]

9.2 Reimbursement of Expenses
Partners will be reimbursed for reasonable and properly documented expenses incurred in the ordinary course of Partnership business, subject to any expense policies agreed by the Partners.

10. Admission of New Partners

10.1 New Partner Requirements
A new Partner may be admitted only with the required approval under Section 6.3 and upon signing a joinder or separate agreement agreeing to be bound by this Agreement.

10.2 Capital and Ownership for New Partners
The capital contribution, ownership percentage, and rights of any new Partner will be determined by agreement of the existing Partners and documented in writing.

11. Withdrawal, Retirement, Death, or Expulsion of a Partner

11.1 Voluntary Withdrawal or Retirement
A Partner who wishes to withdraw or retire must give at least [Number] days’ written notice to the other Partners, unless a different notice period is agreed.

11.2 Death or Incapacity
If a Partner dies or becomes legally incapacitated, their Partnership interest will pass to their estate or legal representative, subject to any buyout rights under Section 12 and any applicable law.

11.3 Expulsion for Cause
A Partner may be expelled for cause (such as serious misconduct, material breach of this Agreement, or repeated failure to perform duties) if the required majority or unanimous vote under Section 6.3 is obtained. The expelled Partner’s interest will be handled under the buyout provisions in Section 12.

12. Buyout and Valuation of Partnership Interests

12.1 Events Triggering Buyout
The Partnership and/or remaining Partners will have the right (but not necessarily the obligation) to purchase a Partner’s interest if any of the following occurs:

• Voluntary withdrawal or retirement;

• Death or incapacity;

• Expulsion for cause;

• Bankruptcy or insolvency of a Partner;

• Any other agreed trigger: [Additional Triggers].

12.2 Valuation Method
The value of the departing Partner’s interest will be determined as follows:

☐ Agreed fixed formula (for example, a multiple of average profits): [Valuation Formula]
☐ Independent appraisal by one or more qualified valuers selected by the Partners: [Valuation Process]
☐ Other method: [Description]

12.3 Payment Terms
Unless otherwise agreed:

• Down payment: [Percentage]% on closing;

• Remaining balance paid over [Number] months/years with interest at [Interest Rate]% per year;

• Security for payment (if any): [Description].

13. Dispute Resolution

13.1 Good Faith Discussion
If a dispute arises under this Agreement, the Partners will first attempt in good faith to resolve it through discussion and negotiation.

13.2 Mediation (Optional)
If the dispute cannot be resolved informally, the Partners may attempt mediation with a neutral mediator before starting legal proceedings:

Mediation Provider (if known): [Mediation Provider or “To be agreed”]

13.3 Governing Law and Venue
This Agreement is governed by the laws of: [State/Province, Country].

Any legal proceedings arising out of or in connection with this Agreement will be brought in the courts located in: [City/Region].

14. Dissolution and Winding Up

14.1 Events of Dissolution
The Partnership may be dissolved upon any of the following:

• A decision to dissolve approved under Section 6.3;

• An event that makes the business unlawful;

• Any other event requiring dissolution under applicable law.

14.2 Winding Up
After dissolution, the Partnership’s affairs will be wound up, and assets will be applied in the following order:

1. To pay or provide for Partnership debts and liabilities;

2. To return any loans made by Partners;

3. To return remaining capital to Partners in proportion to their capital accounts;

4. To distribute any remaining surplus to Partners in proportion to ownership percentages.

15. Miscellaneous

15.1 Entire Agreement
This Agreement represents the entire understanding between the Partners about the Partnership and replaces any prior oral or written agreements on the same subject.

15.2 Amendments
Any amendment to this Agreement must be in writing and signed by the Partners with the required level of approval under Section 6.3.

15.3 Severability
If any part of this Agreement is found invalid or unenforceable, the remainder will continue in full force to the extent permitted by law.

15.4 Notices
Notices under this Agreement will be in writing and sent to the Partners at the addresses listed in Section 1 (or updated addresses provided in writing), by hand delivery, recognized courier, or email (if permitted by the Partners).

15.5 Counterparts and Electronic Signatures
This Agreement may be signed in counterparts, each of which is considered an original. Signatures transmitted electronically will be considered valid and binding.

16. Signatures

IN WITNESS WHEREOF, the Partners have executed this Partnership Agreement as of the Effective Date.

Partner 1 Signature: _______________________________
Partner 1 Printed Name: [Partner 1 Full Legal Name]
Date: [Date]

Partner 2 Signature: _______________________________
Partner 2 Printed Name: [Partner 2 Full Legal Name]
Date: [Date]

Partner 3 Signature (if any): _______________________________
Partner 3 Printed Name: [Partner 3 Full Legal Name]
Date: [Date]

Additional Partner Signatures (if any):

[Partner 4 Signature Block]
[Partner 5 Signature Block]

Schedule A – Ownership and Contributions (Optional Attachment)

• Partner 1 – Ownership Percentage: [Percentage] – Initial Contribution: [Details]

• Partner 2 – Ownership Percentage: [Percentage] – Initial Contribution: [Details]

• Partner 3 – Ownership Percentage: [Percentage] – Initial Contribution: [Details]

• Additional Partners – Ownership Percentage: [Percentage] – Initial Contribution: [Details]