Partnership agreement template
Entering into a business deal or transaction with a new partner? This free partnership agreement template is a great starting point..
Entering into a business deal or transaction with a new partner? This free partnership agreement template is a great starting point..
A partnership agreement is a legal document that outlines the rights, responsibilities, and obligations of each partner in a business partnership. It sets the terms and conditions under which the partners agree to operate their business.
Partners use this type of business contract to agree on various aspects of their business, such as profit and loss distribution, decision-making processes, dispute resolution, and exit strategy.
By doing so, partnership agreements provide clarity and prevent misunderstandings that could potentially harm the business. They are often also referred to as business partnership agreements or partnership contracts.
While partnership agreements may not always be legally required, they are highly recommended for any business partnership. They provide a clear framework for the business relationship, helping to avoid disputes and misunderstandings.
Now you understand what a partnership agreement is, and why they are important. But when should you actually use one? The most common use cases of partnership agreements include:
When you decide to start a business with one or more partners, it's crucial to have a partnership agreement in place. This agreement will outline each partner's investment in the business, their roles and responsibilities, and how profits and losses will be shared.
If you're adding a new partner to an existing business, a partnership agreement can help define their role and stake in the business. It can also help protect the interests of the existing partners.
If your business is evolving and the partnership structure needs to change, a new partnership agreement can help ensure that all partners are on the same page about the new structure and their roles within it.
A partnership agreement can also be used to plan for potential future scenarios, such as the retirement, death, or exit of a partner. By outlining these procedures in advance, you can help ensure a smooth transition when these events occur.
If a dispute arises between partners, a well-drafted partnership agreement can provide a roadmap for resolution, potentially saving the partners time, money, and stress.
Due to their importance, partnership agreements affect various teams in different ways. Different teams and individuals will need to draft and review partnership agreements, depending on the situation.
These teams often include legal, finance, operations, and management. If you are part of a business partnership, you are already a potential user.
However, you may find that legal counsel will often create and own the partnership agreement templates, and they will usually have approval rights too.
The information that your partnership agreement covers will depend on the needs of your business and how you choose to operate.
That said, in addition to the basic elements of a contract, a partnership agreement will typically include the following provisions:
Your partnership agreement should include basic information about the parties involved and the people that the agreement will cover. This should refer specifically to the different partners involved in the agreement.
When drafting your partnership agreement, you need to set out a clear definition of the partnership, including its purpose and the roles and responsibilities of each partner. You should also define the nature of the partnership, whether it is a general partnership or a limited partnership.
The partnership agreement should clearly outline each partner's capital contribution to the partnership and how profits and losses will be distributed among the partners. This is a critical aspect of any partnership agreement and can help prevent disputes down the line.
The partnership agreement should also outline the decision-making processes within the partnership, including how decisions are made, who has the authority to make decisions, and what happens in the event of a deadlock.
The partnership agreement should include a clause outlining how disputes between partners will be resolved. This could include mediation, arbitration, or litigation.
The partnership agreement should also include provisions for the exit of a partner and the dissolution of the partnership. This could include buy-sell provisions, retirement provisions, and procedures for winding up the partnership.
A partnership agreement should also outline what jurisdiction(s) the legal agreement will be governed under if a contractual dispute arises.
Depending on the situation, some partnership agreements may require additional clauses on issues like non-compete and confidentiality, all of which should be outlined from the onset.
Partnership Agreements are legal contracts, which means that they are enforceable by law and within courts - so long as they are written and used correctly.
However, it is also worth noting that certain jurisdictions may have specific requirements for partnership agreements to be legally binding. For example, some jurisdictions may require the agreement to be in writing, while others may accept oral agreements.
With all of this ambiguity surrounding partnership agreements, it is important to get yours right the first time.
However, even with an exhaustive list of what to include, creating a partnership agreement from scratch can be a tiresome ordeal. In fact, business users hoping to improve their contract process frequently complain of how painful the process can be. At its worst, the process looks something like this:
But this approach to creating partnership agreements is both time-consuming and admin-heavy, as you're about to hear.
Building partnership agreements from the ground up is hard work. But why? These are just a few of the various pain points our customers have experienced before automating their contract workflow:
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Fortunately, it's possible to streamline and automate the process used to create and manage partnership agreements in 2023. This is achieved by adopting a flexible contract management platform like Juro.
By leveraging a contract management platform, you can save valuable time, eliminate cross-platform complexities, and allow your legal team to focus on higher-value tasks.
Juro's automated contract templates enable you to generate simple partnership agreements in a matter of seconds. Here's what the workflow looks like in more detail.
In most organizations, legal professionals prefer to maintain control over the content and usage of partnership agreements.
With an automated workflow, in-house lawyers can define and update the terms of the partnership agreement using a contract template.
This empowers other departments to independently access the most up-to-date version of the agreement, ensuring compliance and consistency.
Once the template is set up, business users can autonomously create contracts.
They simply complete a questionnaire, and the system automatically generates the contract.
This minimizes the need for direct involvement from the legal team in every contract creation, allowing them to focus on more strategic initiatives instead of low-value admin.
By using a contract tool like Juro, you can conduct contract negotiations online, with real-time tracking of changes.
This eliminates the hassle of lengthy email threads and version control issues, ensuring efficient collaboration among stakeholders.
Best of all? This negotiation happens online and can be accessed from your browser.
When agreement is reached, contracts can be electronically signed within the platform. This eliminates the need to print, sign, scan, and email documents, offering a seamless and convenient digital signing experience.
Once signed, the contracts are securely stored within the platform. This provides you with a centralized location for all your agreements, ensuring easy accessibility whenever required, and providing peace of mind regarding contract security.
Juro enables you to track your agreements and receive timely reminders for renewal dates. This ensures that no renewal deadlines are missed, enabling you to effectively manage and stay on top of all your contracts.
To find out more about how Juro's flexible, collaborative and data-rich contract management platform can empower you to create and manage contracts more efficiently, hit the button below for a personalized demo.
Juro is the #1-rated contract platform globally for speed of implementation.
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