What are the 4 common terms that should be in a partnership agreement?

Capital contribution: what each partner brings to the table (financially). Distribution of profits: what share each party to an agreement will receive. Duties as partners: what each person must do in the shared business venture. Dispute resolution: what the process is in case a conflict arises.

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Simple Partnership Agreement Template

Prepared for:

[Client.FirstName][Client.LastName]
[Client.Company]

Created by:

[Sender.FirstName][Sender.LastName]
[Sender.Company]

This partnership agreement is entered into by and between the two entities listed below as of [Date].

[Sender.FirstName][Sender.LastName]

[Sender.FirstName][Sender.LastName]
Name
[Sender.Street]	[Sender.Email]
Street	Email
[Sender.City], [Sender.State][Sender.Zip]	[Sender.Phone]
City, State, Zip	Phone

[Client.FirstName][Client.LastName]

[Client.FirstName][Client.LastName]
Name
[Client.Street]	[ClientEmail]
Street	Email
[Client.City], [Client.State][Client.Zip]	[Client.Phone]
City, State, Zip	Phone

Partnership Terms

The partnership shall be known as[Partnership.Name]. The entities listed above agree to jointly enter this partnership, which shall have a principle business address at[Partnership.Address].

The partners agree to contribute initial capital contributions as follows: [Sender.FirstName]

[Sender.LastName] Contributions:

[Contributions]

[Client.FirstName][Client.LastName] Contributions:

[Contributions]

The partners agree that their ownership in the partnership shall be considered equal for operating purposes, while gross profits shall be distributed in accordance with each partner’s actual percentage of total initial capital invested in the partnership.

This partnership agreement shall be considered legally binding on both parties, and shall not be modified or cancelled without written consent from both parties.

Death or bankruptcy by either party shall grant the remaining party the exclusive right to purchase the opposite partners’ share of the partnership in accordance with that partner’s initial contribution.

The partners agree to operate in good faith at all times by acting in the best interests of the partnership without exception.

All financial records related to the partnership shall be documented in accordance with generally accepted business accounting standards. Records shall be audited for completion and accuracy once per calendar year.

Should this partnership agreement be dissolved for any reason, any assets belonging to the partnership shall be liquidated via public auction. Once any outstanding debts are resolved, the remaining profits shall be passed to the partners in accordance with their share of the initial capital contribution.

Acceptance

By signing below, the partners agree to enter into this partnership agreement with one another.

[Sender.Company]

Signature

MM/DD/YYYY

[Sender.FirstName][Sender.LastName]

[Client.Company]

Signature

MM/DD/YYYY

[Client.FirstName][Client.LastName]

Useful resources

FAQ

A simple partnership agreement is a contract between two or more parties that describes their relationship with regard to a shared business. It includes the responsibilities of each party, the distribution of profits, the procedures for situations when a partner leaves or dies, etc.

Capital contribution: what each partner brings to the table (financially).
Distribution of profits: what share each party to an agreement will receive.
Duties as partners: what each person must do in the shared business venture.
Dispute resolution: what the process is in case a conflict arises.

The purpose of a partnership agreement is to specify the rights and responsibilities of each partner. If this isn’t done, the partnership will be governed by the state laws which are one-size-fits-all by definition and might be suboptimal given specific situations.