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This Agreement is made on between and (each a “Partner”), who agree to carry on business together as a general partnership under the name (the “Partnership”) in the State of .
The Partnership is formed to , and for any activity reasonably incidental to it. No Partner may commit the Partnership to a business outside that purpose without the consent required under clause 5.
| Partner | Contributes | Profit share | Expected hours |
|---|---|---|---|
| First Partner | |||
| Second Partner |
A separate capital account shall be maintained for each Partner, credited with contributions and their share of profits, and debited with distributions and their share of losses.
Treating them as identical means the partner who funded the business subsidises the one who did not, permanently. If one Partner contributes materially more, the usual answers are a preferred return on the excess, a loan repaid before profit is split, or a profit share that reflects it. Choose one and write it down.
Profits and losses shall be allocated in the shares set out in clause 2. Each Partner may draw and per month respectively, as an advance against their share of profits and not in addition to it. Draws exceeding a Partner’s allocated profit for the year shall be repaid or charged to their capital account.
Each Partner shall devote the hours set out in clause 2 to the Partnership’s business. A Partner who consistently works materially fewer hours than agreed may, on notice from the other Partner, have their profit share adjusted by agreement or, if none is reached, by the procedure in clause 6.
One partner working sixty hours and one working thirty, owning it equally, is the single most common cause of partnership breakdown. It is rarely in the agreement because raising it at the start felt rude — and by the time it is not rude, there is nothing to point at.
Writing the expectation down does not create the problem. It gives you something to refer to when the problem arrives on its own.
Each Partner has equal management rights in the ordinary conduct of business. The following require the unanimous consent of all Partners:
Where the Partners cannot agree on a matter requiring consent under clause 5, the Partners shall refer the matter to a mediator agreed between them, and if mediation fails within thirty days, to binding arbitration.
A Partner may withdraw on days’ written notice. On withdrawal, death or permanent disability, the Partnership shall purchase that Partner’s interest at fair market value determined by an independent appraiser, payable over years in equal instalments with interest at a rate the Partners set in Schedule A.
Dissolution. A partner who wants out of a business with no buyout terms can force the whole thing to be wound up and sold — and can hold that over every other decision in the meantime. This clause is what stops a disagreement about strategy from becoming a threat to the business.
No Partner may transfer any interest in the Partnership without the consent of the other Partner. Any purported transfer in breach is void. A transferee permitted under this clause takes an economic interest only and does not become a Partner or acquire management rights without the consent required in clause 5.
The Partnership shall maintain complete books at its principal place of business, open to each Partner at any reasonable time. Financial statements shall be provided to each Partner within thirty days of each quarter end.
This Agreement is the entire agreement between the Partners and supersedes all prior discussions. It may be amended only in writing signed by both Partners. It is governed by the laws of .
Whatever you agreed over dinner and never wrote down stops existing the moment this is signed. If something matters — who gets the client relationships, who keeps the vehicle, what happens if one of you goes back to school — it goes in the document or it goes nowhere.