"Partnership Agreement Template"

What Is a Partnership Agreement?

A Partnership Agreement is a legal contract signed between individuals who intend to become partners and form a business to make a profit. The document sets out the terms on which the parties are entering the partnership. The purpose of the agreement is to regulate all of the processes in the partnership, such as management, profit distribution, entering or exiting the partnership, business termination, etc.

  1. A Business Partnership Agreement can be made when individuals have decided to conduct a partnership. It is supposed to provide instructions and resolutions to any situation that the partners can come up with.
  2. A Small Business Partnership Agreement can structure the relationship between the partners from the beginning, allowing them to suit their needs and set a system of rights and obligations for all of them.

Download a printable Partnership Agreement template through the link below or customize it using our online form builder.

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What Is a Silent Partnership Agreement?

A "Silent Partnership Agreement" is a type of Partnership Agreement that is signed between partners when one wants to invest in a business and receive profit but has no desire to participate in running the partnership. A silent partnership consists of:

  1. Managing partners (or general partners). These are the partners that do the managing duty.
  2. Silent partners (or limited partners). These partners invest in the partnership but do not manage it.

This type of partnership has a few drawbacks. It does not give the silent partners the right to run the partnership (unless they were granted voting rights by managing partners). In addition to this, silent partners not only carry the profit of the business but its losses as well. Nevertheless, the income that silent partners receive in this case is not subject to a self-employment tax (since silent partners are not employees). While the liability of a limited partner is narrowed to the amount they invested in the partnership, a general partner's liability is unlimited, and if the partnership will end up in a tough situation, they might lose everything, including their personal assets.

How to Make a Partnership Agreement?

Before writing the agreement, the partners should discuss everything they would like to include there. Each statement should be examined to make sure that the legal language is clear for all of the involved parties. Usually, a Partnership Agreement should include sections, such as:

  1. Information About the Parties. In the first part of the document, the parties should enter their full names and addresses for identification purposes. The addresses can include country, state, city, street name, and building number.
  2. The Subject. Parties use this section to express their intention to conduct a partnership. They agree to set the terms and conditions that will govern their partnership and confirm that these statements are made under the consent of all parties.
  3. Information About the Partnership. Here, parties give a full description of their partnership. They should designate its name, type (general, limited, etc.), purpose, beginning date, location, and other important features they would like to include.
  4. Capital. In this part, the parties can state how they will form the partnership's capital. In addition to designating how much every partner will invest, both in a percent and cash amount, they should also state if the withdrawal of their capital contribution is possible and under which terms, how the financial decisions will be made, information about audit and capital accounts, etc.
  5. Management. This section of the agreement is supposed to determine the management system of the partnership. How the business decisions will be made, who will make them, whether parties will have separate duties or all decisions will be made by voting, etc.
  6. Meetings. In order to control the partnership, the parties are supposed to have regular meetings. Here, they should state how often the meeting will be held, how to call a meeting (if one party needs to resolve an issue), where it can be held, and other aspects connected with it.
  7. Partnership Termination. Parties can use this section to state how and when the partnership will be dissolved. If they do not describe the procedure or state otherwise, then the partnership is supposed to be terminated by a Partnership Dissolution Agreement signed by its partners.

Parties can include other sections in the document, such as governing law, jurisdiction, amendments, definitions, indemnification, contact information, etc.


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Partnership Agreement
This ​ P artnership Agreement (hereinafter referred to as the “Agreement”) is entered into
as of _______________ (hereinafter referred to as the “Effective Date”), by and between
___________________, with a mailing address of​
_ ______________________________
___________________________________ (hereinafter referred to as the “Partner One”)
and ___________________, with a mailing address of​
___________________________
__________________________________ (hereinafter referred to as the “Partner Two”),
collectively referred to as the “Partners,” both of whom agree to be bound by this
Agreement.
BACKGROUND:
A. The Partners wish to associate themselves as partners in business.
B. This Agreement sets out the terms and conditions that govern the Partners within
the Partnership.
IN CONSIDERATION OF and as a condition of the Partners entering into this
Agreement and other valuable consideration, the receipt and sufficiency of which
consideration is acknowledged, the parties to this Agreement agree as follows:
1. Formation. By this Agreement, the Partners enter into a general partnership
(hereinafter referred to as the “Partnership”) in full accordance with the laws of
___________________.
State
2. Name. ​ T he firm name of the Partnership will be ___________________.
3. Purpose. ​ T he purpose of the Partnership will be as follows:
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
4. Term. The Partnership will begin on the Effective Date, as stated above, and will
continue until terminated as provided in this agreement.
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Partnership Agreement
This ​ P artnership Agreement (hereinafter referred to as the “Agreement”) is entered into
as of _______________ (hereinafter referred to as the “Effective Date”), by and between
___________________, with a mailing address of​
_ ______________________________
___________________________________ (hereinafter referred to as the “Partner One”)
and ___________________, with a mailing address of​
___________________________
__________________________________ (hereinafter referred to as the “Partner Two”),
collectively referred to as the “Partners,” both of whom agree to be bound by this
Agreement.
BACKGROUND:
A. The Partners wish to associate themselves as partners in business.
B. This Agreement sets out the terms and conditions that govern the Partners within
the Partnership.
IN CONSIDERATION OF and as a condition of the Partners entering into this
Agreement and other valuable consideration, the receipt and sufficiency of which
consideration is acknowledged, the parties to this Agreement agree as follows:
1. Formation. By this Agreement, the Partners enter into a general partnership
(hereinafter referred to as the “Partnership”) in full accordance with the laws of
___________________.
State
2. Name. ​ T he firm name of the Partnership will be ___________________.
3. Purpose. ​ T he purpose of the Partnership will be as follows:
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
4. Term. The Partnership will begin on the Effective Date, as stated above, and will
continue until terminated as provided in this agreement.
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5. Place of Business. The principal office of the business of the Partnership will be
located at _______________________________________________________________
or such other place as the Partners may from time to time designate.
6. Capital Contributions. Each of the Partners has contributed to the capital of the
Partnership, in cash or property in agreed-upon value, as follows (hereinafter referred to
as the “Capital Contribution”):
Partner:
Description:
Agreed Value:
____________________
________________
________________
____________________
____________________
________________
________________
____________________
____________________
________________
________________
____________________
All Partners will contribute their respective Capital Contributions fully and on time.
8. Withdrawal of Capital. ​ N o Partner will withdraw any portion of their Capital
Contribution without the express written consent of the remaining Partners.
9. Additional Capital. Capital Contributions may be amended from time to time,
according to the requirements of the Partnership provided that the interests of the Partners
are not affected, except with the unanimous consent of the Partners. No Partner will be
required to make Additional Capital Contributions.
Whenever additional capital is determined to be required and an individual Partner is
unwilling or unable to meet the additional contribution requirement within a reasonable
period, as required by Partnership business obligations, remaining Partners may
contribute in proportion to their existing Capital Contributions to resolve the amount in
default. In such cases, the allocation of profits or losses among all the Partners will be
adjusted to reflect the aggregate change in the Capital Contributions by the Partners.
Any advance of money to the Partnership by any Partners in excess of the amounts
provided for in this Agreement or subsequently agreed to as Additional Capital
Contribution will be deemed a debt owed by the Partnership and not an increase in
Capital Contribution of the Partner. This liability will be repaid with interest at rates and
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times to be determined by a majority of the Partners within the limits of what is required
or permitted in the Act. This liability will not entitle the lending Partner to any increased
share of the Partnerships profits nor to greater voting power. Such debts may have
preference or priority over any other payments to Partners as may be determined by a
majority of Partners.
11. Capital Accounts. ​ A n individual capital account (hereinafter referred to as the
“Capital Accounts”) will be maintained for each Partner and their Initial Capital
Contribution will be credited to this account, Any Additional Capital Contributions made
by any Partner will be credited to that Partner’s individual Capital Account.
12. Interest on Capital. ​ N o borrowing charge or loan interest will be due or payable to
any Partner on their agreed Capital Contribution inclusive of any agreed Additional
Capital Contributions.
13. Financial Decisions. ​ D ecisions regarding the distribution of profits, allocation of
losses, and the requirement for Additional Capital Contributions as well as all other
financial matters will be decided by a unanimous vote of the Partners.
14. Profit and Loss. Subject to any other provisions of this Agreement, the net profits
and losses of the Partnership, for both accounting and tax purposes, will accrue to and be
borne by the Partners in proportion to the Partners Capital Contributions inclusive of any
Additional Capital Contributions (hereinafter referred to as the “Profit and Loss
Distribution”).
15. Books of Accounts. ​ A ccurate and complete books of account of the transactions of
the Partnership will be kept in accordance with generally accepted accounting principles
and at all reasonable times will be available and open to inspection and examination by
any Partner. The books and records of the Partnership will reflect all the Partnerships
transactions and will be appropriate and adequate for the business conducted by the
Partnership.
16. Annual Report. ​ A s soon as practicable after the close of each financial year, the
Partnership will furnish to each Partner an annual report showing a full and complete
account of the condition of the Partnership. This report will consist of at least the
following documents:
● A statement of all information as will be necessary for the preparation of each
Partners income or other tax returns;
● A copy of the Partnership’s income tax returns for that financial year;
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● A balance sheet;
● A cash flow statement;
● A breakdown of the profit and loss attributable to each Partner;
● Any additional information that the Partners may require.
17. Banking and Partnership Funds. ​ T he funds of the Partnership will be placed in
such investments and banking accounts as will be designated by the Partners. All
withdrawals from these bank accounts will be made by the duly authorized agent or
agents of the Partners as agreed by the unanimous consent of the Partners. Partnership
funds will be held in the name of the Partnership and will not be commingled with those
of any other person or entity.
18. Fiscal Year. ​ T he fiscal year will end on the ______ day of _________________ each
year.
19. Audit. Any of the Partners will have the right to request an audit of the Partnership
books. The cost of the audit will be borne by the Partnership. The audit will be performed
by an accountancy firm acceptable to all the Partners. Not more than ______ audit will be
required by any or all of the Partners for any financial year.
20. Management. ​ E xcept as all of the Partners may otherwise agree in writing, all
actions and decisions respecting the management, control of the Partnership and its
business will be decided by a unanimous vote of the Partners.
21. Admitting a New Partner. ​ A new Partner may only be admitted to the Partnership
with a unanimous vote of the existing Partners.
Any new Partner agrees to be bound by all the covenants, terms, and conditions of this
Agreement, inclusive of all current and future amendments. Further, a new Partner will
execute such documents as are needed to affect the admission of the new Partner. Any
new Partner will receive such business interest in the Partnership as determined by a
unanimous decision of the other Partners.
22. Transfer of Partnership Interest. A Partner may assign their distribution interest in
the Partnership and its assets. This transfer will only include that Partners economic
rights and interests and will not include any other rights of that Partner nor will it include
an automatic admission as a Partner of the Partnership or the right to exercise any
management or voting interests. A Partner who assigns any or all of their partnership
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interest to any third party will relinquish their status as Partner including all management
and voting rights. Assignment of Partner status, under this clause, including any
management and voting interests will require the consent of all the remaining Partners.
23. Voluntary Withdrawal of a Partner. Any Partner will have the right to voluntarily
withdraw from the Partnership at any time, written notice of intention to withdraw must
be served upon the remaining Partners at least ______ months prior to the withdrawal
date.
Except as otherwise provided elsewhere in this Agreement, the voluntary withdrawal of a
Partner will have no effect upon the continuance of the Partnership business.
In the event that a Partner's interest in the Partnership is to be sold, the remaining Partners
have a right of first purchase on that interest. If any of the remaining Partners have a right
of first purchase on that interest. If any of the remaining Partners elect to purchase the
interest of the Dissociated Partner, those Partners will serve written notice of such
election upon the Dissociated Partner within ______ days after receipt of the Dissociated
Partners notice of intention to withdraw, including the purchase price and method and
schedule of payment for the Dissociated Partner's interest. The purchase amount of any
buyout of the Dissociated Partners interest will be determined as outlined in the
Valuation of Interests section of this Agreement.
24. Involuntary Withdrawal of a Partner. ​ E vents resulting in the involuntary
withdrawal of a Partner from the Partnership will include but not be limited to:
● Death of a Partner;
● Partner mental incapacity;
● Partner disability preventing reasonable participation in the Partnership;
● Partner incompetence;
● Breach of fiduciary duties by a Partner;
● Criminal conviction of a Partner;
● Expulsion of a Partner;
● Operation of Law against a Partner, or any act or omission of a Partner that can
reasonably be expected to bring the business or societal reputation of the
Partnership into disrepute.
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