partnership contract

[w0gga]

Hi all, how do I go about drawing a partnership contract up? What are the steps I need to take. Thanks ......

 

[Deleted member 130603]

Having a partnership agreement is a very, very good idea. I know you can access simple generic ones from various websites which will be a good start.

Firstly, are you going to be a LTD company? If so and you are both directors then much of what you do will be governed by company Law and determined by how the shares are apportioned. If LTD I would have a drag and tag and an anti dilution clause.

Personally I would NEVER have a business partner, and wouldn't advise anyone else to, there are many good Lawyers who make their living from partnership disputes. Business is difficult enough without having to agree and OK everything with someone else. Think long and hard about what the other person is bringing to the table; what can they do that you can't do yourself? Are their values consistent with yours? Are their actions consistent with their words? What relevant experience do they have? Do they share your passion?

Are you borrowing money? Are you happy to share liability for debts?

Have a look at some partnership agreements and get yourself thinking about what is and isn't included.

I think the reason so many peoples' first ventures are partnerships is because of the individuals lack of confidence and a bit of the 'safety in numbers' mentality; at least mine was and many of the others I have seen. Have a good think and ask yourself the question 'can I do this by myself?' if the honest answer is yes, then your first bad business decision is giving somebody else half of your business and profits.

I'm not trying to put you off here, I just cannot over emphasize how much caution you should exercise going into a business partnership. I can attest that the breaking up of a business partnership is a worse (in my opinion) than a romantic relationship break up.

If you do decide to go ahead then, Partnership agreement, good luck, and congratulations, in that order.

 

[Deleted member 130603]

http://www.smallbusinessnotes.com/managing-your-business/sample-partnership-agreement.html

 

[w0gga]

Having a partnership agreement is a very, very good idea. I know you can access simple generic ones from various websites which will be a good start.

Firstly, are you going to be a LTD company? If so and you are both directors then much of what you do will be governed by company Law and determined by how the shares are apportioned. If LTD I would have a drag and tag and an anti dilution clause.

Personally I would NEVER have a business partner, and wouldn't advise anyone else to, there are many good Lawyers who make their living from partnership disputes. Business is difficult enough without having to agree and OK everything with someone else. Think long and hard about what the other person is bringing to the table; what can they do that you can't do yourself? Are their values consistent with yours? Are their actions consistent with their words? What relevant experience do they have? Do they share your passion?

Are you borrowing money? Are you happy to share liability for debts?

Have a look at some partnership agreements and get yourself thinking about what is and isn't included.

I think the reason so many peoples' first ventures are partnerships is because of the individuals lack of confidence and a bit of the 'safety in numbers' mentality; at least mine was and many of the others I have seen. Have a good think and ask yourself the question 'can I do this by myself?' if the honest answer is yes, then your first bad business decision is giving somebody else half of your business and profits.

I'm not trying to put you off here, I just cannot over emphasize how much caution you should exercise going into a business partnership. I can attest that the breaking up of a business partnership is a worse (in my opinion) than a romantic relationship break up.

If you do decide to go ahead then, Partnership agreement, good luck, and congratulations, in that order.

Thanks this was a perfect reply and gave me a lot to think about...

thank you

 

[Deleted member 130603]

Thanks, that's a great compliment.

I don't want to sound cynical here, though to illustrate point just read the legal forum and you'll see that a majority of the questions are related to partnership disputes. Tread carefully...

 

[The Resolver]

http://www.smallbusinessnotes.com/managing-your-business/sample-partnership-agreement.html

Great example of why it is a bad idea to use templates found on the web. Apart from the fact that taking advice means you get to understand what it is you are signing up to , the link provided here is to a US document.

So if you use this you deny yourself the right to sue in court if your partner breaches the agreement. This is because it says you agree to all matters being arbitrated under the rules of the American Arbitration Association. OK you can get a local arbitrator to follow the AAA Rules but arbitration can be much more costly than suing in court especially if you can bring it under the small claims limit (about to rise to £10,000).

Further the English law provision that either partner can terminate the partnership without the agreement of the other seems to be reversed here where it says termination has to be 'by agreement of the partners'.

 

[Deleted member 130603]

Great example of why it is a bad idea to use templates found on the web. Apart from the fact that taking advice means you get to understand what it is you are signing up to , the link provided here is to a US document.

So if you use this you deny yourself the right to sue in court if your partner breaches the agreement. This is because it says you agree to all matters being arbitrated under the rules of the American Arbitration Association. OK you can get a local arbitrator to follow the AAA Rules but arbitration can be much more costly than suing in court especially if you can bring it under the small claims limit (about to rise to £10,000).

Further the English law provision that either partner can terminate the partnership without the agreement of the other seems to be reversed here where it says termination has to be 'by agreement of the partners'.

I hold my hands up that partnership agreement was the first one that came up on google and I didn't check it over.

OP, this post (The Resolver's) should give you a good idea of the complex legalities of being involved a LTD company partnership. Whatever you do, make sure you cover yourself from every angle if you decide to go ahead, it's a minefield. If possible try and retain 51% of the shares.

 

[Alan R Price]

For something as important as a shareholder or partnership agreement, never, I repeat, never, use a free template. What's the old saw about the ship being spoilt for a hap'orth of tar? Spending a few hundred pounds on a well-drafted agreement could save tens of thousands of pounds (or more) later. Believe me, I've seen it when it goes wrong.

As for never having a business partner, I wonder what the economies of the developed nations would look like now if no business had ever gone further than being a one-man band.