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Partnership Agreement Template

Free partnership agreement template for business partners. Covers capital contributions, profit sharing, management duties, dispute resolution, and dissolution.

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Partnership Agreement


1. Formation and Name

This Partnership Agreement ("Agreement") is entered into on [Date] by and between [Partner 1 Name] and [Partner 2 Name] (collectively, the "Partners"). The Partners hereby form a general partnership under the name [Partnership Name] (the "Partnership") for the purpose of [describe business purpose]. The principal place of business shall be [Address].

2. Capital Contributions

Each Partner shall contribute the following to the Partnership: [Partner 1]: [Currency] [Amount] in cash and/or [description of non-cash assets]; [Partner 2]: [Currency] [Amount] in cash and/or [description of non-cash assets]. Additional capital contributions may be required by unanimous consent. No Partner shall withdraw their capital contribution without the written consent of all Partners.

3. Profit and Loss Sharing

Net profits and losses shall be allocated among the Partners as follows: [Partner 1]: [X]%; [Partner 2]: [Y]%. Profits shall be distributed [monthly/quarterly/annually] within [15] days of the close of each period. Each Partner may draw a monthly salary of [Amount] before profit distribution, subject to sufficient cash flow. Losses shall be shared in the same ratio as profits.

4. Management and Decision-Making

All Partners shall have equal rights in the management and conduct of the Partnership business. Decisions regarding ordinary business operations may be made by any Partner. The following decisions require unanimous consent: (a) borrowing in excess of [Amount]; (b) entering contracts exceeding [Amount]; (c) hiring or terminating employees; (d) admitting a new partner; (e) selling or mortgaging Partnership assets.

5. Withdrawal and Buyout

A Partner may withdraw from the Partnership by providing [90] days' written notice. The withdrawing Partner's interest shall be valued at fair market value as determined by an independent appraiser. The remaining Partner(s) shall have the option to purchase the withdrawing Partner's interest over [12/24] months in equal installments. A withdrawing Partner shall not compete with the Partnership for [12] months.

6. Dissolution

The Partnership shall dissolve upon: (a) unanimous agreement of the Partners; (b) the death or incapacity of a Partner (unless the remaining Partners elect to continue); (c) bankruptcy of the Partnership; (d) court order. Upon dissolution, the Partnership assets shall be liquidated and applied first to debts and obligations, then to return of capital contributions, and finally distributed as profits.

Signature — Party A

Signature — Party B

Tips for Using This Template

  • Clearly define each partner's role and daily responsibilities to prevent overlap and conflict.
  • Include a deadlock resolution mechanism (mediator, casting vote, coin flip) for two-partner businesses.
  • Address what happens if a partner wants to sell their interest to a third party - right of first refusal is standard.
  • Consider forming an LLP or LLC instead of a general partnership to limit personal liability.

Frequently Asked Questions

Do I need a partnership agreement if there are only two partners?
Absolutely. Without a written agreement, your partnership will be governed by default state laws, which may not reflect your intentions. A written agreement is especially critical for two-partner businesses to handle deadlocks and departures.
Can profit sharing differ from capital contribution ratios?
Yes, partners can agree to any profit-sharing arrangement regardless of capital contributions. One partner might contribute more capital while another contributes more labor or expertise. Just ensure the arrangement is clearly documented.
What is the difference between a partnership agreement and an operating agreement?
A partnership agreement governs general partnerships or limited partnerships. An operating agreement governs LLCs. The concepts are similar, but the legal structures differ in liability protection and tax treatment.

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Disclaimer: This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction. Consult a qualified legal professional before using this document for any binding agreement. ContractClaw Sign is not a law firm and does not provide legal services.

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