A partnership agreement is an agreement between two people or institutions and contains clearly defined terms and conditions of the partnership including, but not limited to, each partners' responsibilities, their pay and their roles within the business.

Partnership agreements are legal documents entailing all rules and regulations that are to be followed by the partners in the business. It is essential for businesses to have a partnership agreement, no matter how close or how much understanding the partners may have.

With a partnership agreement in place it is possible to prevent potential future disagreements that could occur pertaining to the objectives and responsibilities of the partnership.

Partnership agreements can prevent lawsuits

If conflict should arise between partners of the business, without a partnership agreement in place, this may lead to lawsuits being pursued by one partner against the other. With the right terms and conditions in place however, legal disputes are avoidable saving both time and money.

Where possible, it is better to create partnership agreements that are as simplistic as possible so they are easily interpreted. Place emphasis on clearly defining the major details of the partnership such as the partner’s ownership percentage and profit percentage.

Essential information to be included in partnership agreements are things such as partners full names, trade names used for the business, the purpose of the partnership and the partners’ investments and contributions to the partnership.

Decide how to share profits and losses

The agreement should give information on how the profits and shares of the partnership are distributed between the partners. The agreement should also state how much salary will be paid to each partner, how it is possible for each partner to discontinue the partnership, if it is possible for the partner to conduct some other business outside of the partnership, how it is possible to expel partners and how it is possible to bring in new partners.

With so much to be included in a partnership agreement, it is better to enlist the help of a legal firm to frame the agreement. We at DWT Legal are more than willing to provide help in framing the perfect partnership agreement for you, for a smooth sailing and effective partnership. If you would like to discuss partnerships with us, please call us on 01562 514862, email This e-mail address is being protected from spambots. You need JavaScript enabled to view it or contact us using the contacts page of our website.