Partnership Agreement

Educational template — not legal advice. This template is a starting point only. Have a qualified lawyer review and adapt it before you sign or rely on it. PropoDoc is not a law firm.

Partners: [Full legal name of each partner] Business name: [Name of the partnership / business] Effective date: [Date the partnership begins]

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1. Parties and formation

This Partnership Agreement is made between [Partner 1 full legal name] and [Partner 2 full legal name] (together, the "Partners"), who agree to carry on business together as [business name], a [type of business] (the "Partnership"), starting on the effective date above.

[Note: confirm with your lawyer which legal structure applies and that every named person is intended to be a partner rather than an employee or contractor.]

2. Purpose of the business

The Partnership is formed to [describe the business and what it does]. The Partners may change this purpose only by [agreed method, e.g., unanimous written agreement].

3. Capital contributions

Each Partner contributes the following to the Partnership:

• [Partner 1]: [cash amount, plus any equipment, property, intellectual property, or sweat equity, with an agreed value for non-cash items]
• [Partner 2]: [cash amount, plus any equipment, property, intellectual property, or sweat equity, with an agreed value for non-cash items]

[Note: record the agreed value of every non-cash contribution. Ask your lawyer and accountant how contributions affect ownership, tax, and each Partner's capital account.]

4. Ownership, profits, and losses

• Ownership shares: [Partner 1] holds [percent] and [Partner 2] holds [percent].
• Profit and loss split: profits and losses are shared [in the same proportions as ownership / or state a different split and the reason].
• Drawings: Partners may draw money from the Partnership [state how often and any limits].

5. Roles, responsibilities, and decision-making

• Roles: [Partner 1] is responsible for [areas]; [Partner 2] is responsible for [areas].
• Day-to-day decisions: each Partner may make routine decisions within their area up to [threshold].
• Major decisions: decisions such as [borrowing money, hiring, large purchases, taking on a new partner, selling the business] require [a majority / the agreement of all Partners].
• Deadlock: if the Partners cannot agree on a major decision, they will [state the tie-breaking method].

6. Admitting a new partner

A new partner may join only with [the written agreement of all existing Partners]. The terms of admission, including capital contribution and ownership share, will be agreed in writing and this Agreement updated accordingly.

7. A partner leaving or being removed

• Voluntary exit: a Partner who wishes to leave will give [notice period] written notice.
• Removal: a Partner may be removed for [stated serious causes] by [the required vote].
• Death or incapacity: if a Partner dies or can no longer work, [state what happens to their share].
• Buy-out: the leaving Partner's share will be valued by [valuation method] and may be bought by [the remaining Partners / the Partnership], paid [lump sum or over an agreed period].

[Note: the buy-out and valuation terms are among the most important and most disputed clauses — have your lawyer draft and review them carefully.]

8. Dispute resolution

If a dispute arises, the Partners will first try to resolve it through honest discussion. If that fails, they will use [mediation], and if still unresolved, [arbitration or the courts of the governing jurisdiction].

9. Dissolution

The Partnership may be wound up [on the agreement of all Partners / or on a stated event]. On dissolution, the assets will be used to pay debts first, then to repay Partners' capital, and any remainder shared [in the agreed proportions]. The following obligations continue after dissolution: [confidentiality, accrued amounts, and any others your lawyer recommends].

10. General

• Governing law: [jurisdiction]
• Confidentiality: each Partner keeps the Partnership's non-public information confidential.
• Amendments: this Agreement may be changed only in writing, signed by all Partners.
• Entire agreement: this document records the whole agreement between the Partners about the Partnership.

[Note: this general section, and the choice of governing law, decides how the whole Agreement is interpreted. Confirm all of it with your lawyer.]

11. Signatures

Partner 1: ______________________ Name: [ ] Date: ____________

Partner 2: ______________________ Name: [ ] Date: ____________