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(e.g. XYZ Partnership)

Frequently Asked Questions

What is a Partnership?A partnership is a form of business organization in which two or more individuals (partners) manage and operate the business with a view to making a profit. Each partner shares a fixed proportion of the partnership profits and losses.What is the difference between a General Partnership and other types of partnerships?A General Partnership is a business model consisting of two or more persons (general partners) where each partner is personally liable for all debts and obligations of the partnership (joint and several liability). Each partner is responsible for the outcome of any legal action (lawsuit) regardless of whether the partner was personally involved in the actions that led to the lawsuit. LawDepot's Partnership Agreement is designed for use with a General Partnership.

A Limited Partnership consists of at least one General Partner as well as one or more Limited Partners. Similar to a General Partnership, the General Partners are jointly and severally liable for the debts and obligations of the partnership. The liability of a Limited Partner is limited to the amount of capital they contributed to the partnership.

In a Limited-Liability Partnership , each partner is only liable for their own actions (and the acts of employees under their direct supervision) and not for the negligent acts of other partners. Limited-Liability Partnerships are commonly used by accounting firms and law firms.
What is a Partnership Agreement?A partnership agreement is an agreement between two or more persons (partners) setting out the terms and conditions under which they will operate a for-profit business partnership. The partnership agreement will describe the cash contribution requirements for each partner, the distribution of profits and losses between partners, as well as other duties and obligations. The general partnership agreement does not have to be filed or registered.What partnership name should I use?The name of the Partnership should be distinguishable from the name of any other existing business entity (corporation, partnership, LLC, etc.).

If you pick a name that is too similar to an existing business you may be asked to change it. A corporate name search is recommended.
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PARTNERSHIP AGREEMENT

THIS PARTNERSHIP AGREEMENT (the "Agreement") made and entered into this 26th day of July, 2014 (the "Execution Date"),

BETWEEN

____________________________ of _________________________, and
____________________________ of _________________________

(individually the "Partner" and collectively the "Partners").

BACKGROUND:

A. The Partners wish to associate themselves as partners in business.
B. The terms and conditions of this Agreement sets out the terms and conditions as to how they will be partners.

IN CONSIDERATION OF and as a condition of the Partners entering into this Agreement and other valuable consideration, the receipt and sufficiency of which consideration is acknowledged, the parties to this Agreement agree as follows:

  1. Formation
  2. By this Agreement the Partners enter into a general partnership (the "Partnership") in accordance with the laws of the State of . The rights and obligations of the Partners will be as stated in the applicable legislation of the State of  (the 'Act') except as otherwise provided here.
  3. Name
  4. The firm name of the Partnership will be ____________________.
  5. Purpose
  6. The purpose of the Partnership will be: ___________________________________.
  7. Term
  8. The Partnership will begin on July 26th, 2014 and will continue until terminated as provided in this Agreement.
  9. Place of Business
  10. The principal office of the business of the Partnership will be located at ______________________________ or such other place as the Partners may from time to time designate.
  11. Capital Contributions
  12. Each of the Partners has contributed to the capital of the Partnership, in cash or property in agreed upon value, as follows (the "Capital Contribution"):

    Partner

    Contribution Description

    Agreed Value

    ____________________________

     

    $ USD

    ____________________________

     

    $ USD

  13. The Partners will contribute their respective Capital Contributions fully and on time according to the following schedule:

    Partner

    Contribution Schedule Description

    ____________________________

    All contributions will be submitted no later than midnight July 26, 2014

    ____________________________

    All contributions will be submitted no later than midnight July 26, 2014

  14. Withdrawal of Capital
  15. No Partner will withdraw any portion of their Capital Contribution without the express written consent of the remaining Partners.
  16. Additional Capital
  17. Capital Contributions may be amended from time to time, according to the requirements of the Partnership provided that the interests of the Partners are not affected, except with the unanimous consent of the Partners. No Partner will be required to make Additional Capital Contributions. Whenever additional capital is determined to be required and an individual Partner is unwilling or unable to meet the additional contribution requirement within a reasonable period, as required by Partnership business obligations, remaining Partners may contribute in proportion to their existing Capital Contributions to resolve the amount in default. In such case the allocation of profits or losses among all the Partners will be adjusted to reflect the aggregate change in Capital Contributions by the Partners.
  18. Any advance of money to the Partnership by any Partner in excess of the amounts provided for in this Agreement or subsequently agreed to as Additional Capital Contribution will be deemed a debt due from the Partnership and not an increase in Capital Contribution of the Partner. This liability will be repaid with interest at rates and times to be determined by a majority of the Partners within the limits of what is required or permitted in the Act. This liability will not entitle the lending Partner to any increased share of the Partnership's profits nor to a greater voting power. Such debts may have preference or priority over any other payments to Partners as may be determined by a majority of the Partners.
  19. Capital Accounts
  20. An individual capital account (the "Capital Accounts") will be maintained for each Partner and their Initial Capital Contribution will be credited to this account. Any Additional Capital Contributions made by any Partner will be credited to that Partner's individual Capital Account.
  21. Interest on Capital
  22. No borrowing charge or loan interest will be due or payable to any Partner on their agreed Capital Contribution inclusive of any agreed Additional Capital Contributions.
  23. Drawing Accounts
  24. An individual drawing account will be maintained for each Partner. Each Partner will be entitled to draw against their share of the profits in such amounts and at such time as will be agreed by the Partners. The drawing account is a temporary account and is expected to have a debit balance if there have been any withdrawals. At the end of each accounting year, the drawing accounts are closed by transferring the debit balance to each Partner's capital account.
  25. Financial Decisions
  26. Decisions regarding the distribution of profits, allocation of losses, and the requirement for Additional Capital Contributions as well as all other financial matters will be determined by a _____% (percent) vote of the Partners.
  27. Profit and Loss
  28. Subject to the other provisions of this Agreement, the net profits and losses of the Partnership, for both accounting and tax purposes, will accrue to and be borne by the Partners according to the following schedule:

    PARTNER

    PROFIT/LOSS PERCENT

    ____________________________

    0%

    ____________________________

    0%

  29. Books of Account
  30. Accurate and complete books of account of the transactions of the Partnership will be kept and at all reasonable times be available and open to inspection and examination by any Partner. The Books of Account will be kept on the cash basis method of accounting.
  31. Annual Report
  32. As soon as practicable after the close of each fiscal year, the Partnership will furnish to each Partner an annual report showing a full and complete account of the condition of the Partnership. This report will consist of at least the following documents:
    1. A statement of all information as will be necessary for the preparation of each Partner's income or other tax returns;
    2. A copy of the Partnership's federal income tax returns for that fiscal year; and
    3. Any additional information that the Partners may require.
  33. Banking and Partnership Funds
  34. The funds of the Partnership will be placed in such investments and banking accounts as will be designated by the Partners.  Partnership funds will be held in the name of the Partnership and will not be commingled with those of any other person or entity.
  35. Fiscal Year
  36. The fiscal year will end on the 1st day of January of each year.
  37. Audit
  38. Any of the Partners will have the right to request an audit of the Partnership books. The cost of the audit will be borne by the Partnership. The audit will be performed by an accounting firm acceptable to all the Partners. Not more than one (1) audit will be required by any or all of the Partners for any fiscal year.
  39. Management
  40. Except as all of the Partners may otherwise agree in writing, all actions and decisions respecting the management, operation and control of the Partnership and its business require the consent and agreement of not less than _____% (percent) of the Partnership voting interest.
  41. Contract Binding Authority
  42. Each Partner will have authority to bind the Partnership in contract.
  43. Tax Matters Partner
  44. The tax matters partner will be ____________________________ (the "Tax Matters Partner"). The Tax Matters Partner will prepare, or cause to be prepared, all tax returns and reports for the Partnership and make any related elections that the Partners deem advisable.
  45. A Tax Matters Partner can voluntarily withdraw from the position of Tax Matters Partner or can be appointed or replaced by a majority vote of the other Partners. In the event of a withdrawal of the Tax Matters Partner from the Partnership, the remaining Partners will appoint a successor as soon as practicable.
  46. Meetings
  47. Regular meetings will be held ___________________.
  48. All meetings will be held at a time and in a location that is reasonable, convenient and practical considering the situation of all Partners.
  49. Admitting a New Partner
  50. A new Partner may only be admitted to the Partnership with a unanimous vote of the existing Partners.
  51. Any new Partner agrees to be bound by all the covenants, terms, and conditions of this Agreement, inclusive of all current and future amendments. Further, a new Partner will execute such documents as are needed to effect the admission of the new Partner. Any new Partner will receive such business interest in the Partnership as determined by a unanimous decision of the other Partners.
  52. Transfer of Partnership Interest
  53. A Partner will not in any way voluntarily alienate their interest in the Partnership or its assets. Any such prohibited transfer, if attempted, will be void and without force or effect.
  54. Dissociation of a Partner
  55. Voluntary Withdrawal: No Partner may voluntarily withdraw from the Partnership for a period of three (3) months from the execution date of this Agreement (the "Prohibited Withdrawal Period"). Where a Partner withdraws prior to the end of that Prohibited Withdrawal Period, that Partner may be subject to penalties that reasonably reflect the damages done to the Partnership caused by the withdrawal of the Dissociated Partner prior to the end of the Prohibited Withdrawal Period including, but not limited to, loss of Partnership earnings. After the expiration of the Prohibited Withdrawal Period, any Partner (the "Dissociated Partner") will have the right to voluntarily withdraw from the Partnership at any time. Written notice of intention to withdraw must be served upon the remaining Partners at least three (3) months prior to the withdrawal date. The withdrawal of that Dissociated Partner will result in the dissolution of the Partnership. It remains incumbent on the Dissociated Partner to exercise the right to withdraw in good faith and to minimize any present or future harm done to the remaining Partners as a result of the withdrawal.
  56. Involuntary Withdrawal: Events leading to the involuntary withdrawal of a Partner (the "Dissociated Partner") from the Partnership will include but not be limited to: death of a Partner; Partner mental incapacity; Partner disability preventing reasonable participation in the Partnership; Partner incompetence; breach of fiduciary duties by a Partner; criminal conviction of a Partner; Operation of Law against a Partner or a legal judgment against a Partner that can reasonably be expected to bring the business or societal reputation of the Partnership into disrepute. Expulsion of a Partner can also occur on application by the Partnership or another Partner, where it has been judicially determined that the Partner: has engaged in wrongful conduct that adversely and materially affected the Partnership's business; has willfully or persistently committed a material breach of this Agreement or of a duty owed to the Partnership or to the other Partners; or has engaged in conduct relating to the Partnership's business that makes it not reasonably practicable to carry on the business with the Partner. The withdrawal of such Partner will result in the dissolution of the Partnership.
  57. Where the dissociation of a Partner for any reason results in the dissolution of the Partnership then the Partnership will proceed in a reasonable and timely manner to dissolve the Partnership, with all debts being paid first, prior to any distribution of the remaining funds. Valuation and distribution will be determined as described in the Valuation of Interest section of this Agreement.
  58. The remaining Partners retain the right to seek damages from a dissociated Partner where the dissociation resulted from a malicious or criminal act by the dissociated Partner or where the dissociated Partner had breached their fiduciary duty to the Partnership or was in breach of this Agreement or had acted in a way that could reasonably be foreseen to bring harm or damage to the Partnership or to the reputation of the Partnership.
  59. Dissolution
  60. The Partnership may be dissolved by a _____% (percent) vote by the Partners.
  61. Distribution of Property on Dissolution of Partnership
  62. Upon Dissolution of the Partnership and liquidation of Partnership Property, and after payment of all selling costs and expenses, the liquidator will distribute the Partnership assets to the following groups according to the following order of priority:
    1. In satisfaction of liabilities to creditors except Partnership obligations to current Partners;
    2. In satisfaction of Partnership obligations to current Partners to pay debts; and
    3. To the Partners in proportion to their respective Profit and Loss sharing ratios.
  63. The claims of each priority group will be satisfied in full before satisfying any claims of a lower priority group. Any excess of Partnership assets after liabilities or any insufficiency in Partnership assets in resolving liabilities under this section will be resolved by the Partners in proportion to the respective Profit and Loss sharing ratios of each Partner as set out in this Agreement.
  64. Valuation of Interest
  65. In the absence of a written agreement setting a value, the value of the Partnership will be based on the fair market value appraisal of all Partnership assets (less liabilities) determined in accordance with generally accepted accounting procedures. This appraisal will be conducted by an independent accounting firm agreed to by all Partners. An appraiser will be appointed within a reasonable period of the date of withdrawal or dissolution. The results of the appraisal will be binding on all Partners. A withdrawing Partner's interest will be based on the proportion of their respective Profit and Loss sharing ratio less any outstanding liabilities the withdrawing Partner may have to the Partnership. The intent of this section is to ensure the survival of the Partnership despite the withdrawal of any individual Partner.
  66. No allowance will be made for goodwill, trade name, patents or other intangible assets, except where those assets have been reflected on the Partnership books immediately prior to valuation.
  67. Goodwill
  68. The goodwill of the Partnership business will be assessed at an amount to be determined by appraisal using generally accepted accounting procedures.
  69. Title to Partnership Property
  70. Title to all Partnership Property will remain in the name of the Partnership. No Partner or group of Partners will have any ownership interest in such Partnership Property in whole or in part.
  71. Voting
  72. In any vote required by the Partnership, the number of votes each Partner is entitled to cast is based upon the proportion of Capital Contributions of each Partner compared to the total Capital Contributions of all Partners.
  73. Force Majeure
  74. A Partner will be free of liability to the Partnership where the Partner is prevented from executing their obligations under this Agreement in whole or in part due to force majeure, such as earthquake, typhoon, flood, fire, and war or any other unforeseen and uncontrollable event where the Partner has communicated the circumstance of said event to any and all other Partners and taken any and all appropriate action to mitigate said event.
  75. Duty of Loyalty
  76. No Partner will engage in any business, venture or transaction, whether directly or indirectly, that might be competitive with the business of the Partnership or that would be in direct conflict of interest to the Partnership. Any potential conflicts of interest will be deemed an Involuntary Withdrawal of the offending Partner and may be treated accordingly by the remaining Partners. A withdrawing Partner will not carry on a similar business to the business of the Partnership within any established or contemplated market regions of the Partnership for a period of at least three (3) months after the date of withdrawal.
  77. Duty of Accountability for Private Profits
  78. Each Partner must account to the Partnership for any benefit derived by that Partner without the consent of the other Partners from any transaction concerning the Partnership or any use by that Partner of the Partnership property, name or business connection. This duty continues to apply to any transactions undertaken after the Partnership has been dissolved but before the affairs of the Partnership have been completely wound up by the surviving Partner or Partners or their agent or agents.
  79. Duty to Devote Time
  80. Each Partner will devote such time and attention to the business of the Partnership as the majority of the Partners will from time to time reasonably determine for the conduct of the Partnership business.
  81. Forbidden Acts
  82. No Partner may do any act in contravention of this Agreement.
  83. No Partner may permit, intentionally or unintentionally, the assignment of express, implied or apparent authority to a third party that is not a Partner in the Partnership.
  84. No Partner may do any act that would make it impossible to carry on the ordinary business of the Partnership.
  85. No Partner may confess a judgment against the Partnership.
  86. No Partner will have the right or authority to bind or obligate the Partnership to any extent with regard to any matter outside the intended purpose of the Partnership.
  87. Any violation of the above Forbidden Acts will be deemed an Involuntary Withdrawal of the offending Partner and may be treated accordingly by the remaining Partners.
  88. Indemnification
  89. All Partners will be indemnified and held harmless by the Partnership from and against any and all claims of any nature, whatsoever, arising out of a Partner's participation in Partnership affairs. A Partner will not be entitled to indemnification under this section for liability arising out of gross negligence or willful misconduct of the Partner or the breach by the Partner of any provisions of this Agreement.
  90. Liability
  91. A Partner will not be liable to the Partnership, or to any other Partner, for any mistake or error in judgment or for any act or omission done in good faith and believed to be within the scope of authority conferred or implied by this Agreement or the Partnership.
  92. Liability Insurance
  93. The Partnership may acquire insurance on behalf of any Partner, employee, agent or other person engaged in the business interest of the Partnership against any liability asserted against them or incurred by them while acting in good faith on behalf of the Partnership.
  94. Life Insurance
  95. The Partnership will have the right to acquire life insurance on the lives of any or all of the Partners, whenever it is deemed necessary by the Partnership. Each Partner will cooperate fully with the Partnership in obtaining any such policies of life insurance.
  96. Amendments
  97. The Partnership may, at any time, amend this Partnership agreement with a _____% (percent) vote of the Partners, with the exception of this section and the Voting section, both of which will require a unanimous vote.
  98. Jurisdiction
  99. The Partners submit to the jurisdiction of the courts of the State of  for the enforcement of this Agreement or any arbitration award or decision arising from this Agreement.
  100. Mediation and Arbitration
  101. In the event a dispute arises out of or in connection with this Agreement, the Parties will attempt to resolve the dispute through friendly consultation.
  102. If the dispute is not resolved within a reasonable period then any or all outstanding issues may be submitted to mediation in accordance with any statutory rules of mediation. If mediation is not successful in resolving the entire dispute or is unavailable, any outstanding issues will be submitted to final and binding arbitration in accordance with the laws of the State of . The arbitrator's award will be final, and judgment may be entered upon it by any court having jurisdiction within the State of.
  103. Definitions
  104. For the purpose of this Agreement, the following terms are defined as follows:
    1. "Additional Capital Contributions" means Capital Contributions, other than Initial Capital Contributions, made by Partners to the Partnership.
    2. "Capital Contribution" means the total amount of cash or Property contributed to the Partnership by any one Partner.
    3. "Initial Capital Contribution" means Capital Contributions made by any Partner to acquire an interest in the Partnership.
    4. "Operation of Law" means rights or duties that are cast upon a party by the law, without any act or agreement on the part of the individual including, but not limited to, an assignment for the benefit of creditors, a divorce, or a bankruptcy.
  105. Miscellaneous
  106. Time is of the essence in this Agreement.
  107. This Agreement may be executed in counterparts.
  108. Headings are inserted for the convenience of the parties only and are not to be considered when interpreting this Agreement. Words in the singular mean and include the plural and vice versa. Words in the masculine gender include the feminine gender and vice versa. Words in the neuter gender include the masculine gender and the feminine gender and vice versa.
  109. If any term, covenant, condition or provision of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, it is the parties' intent that such provision be reduced in scope by the court only to the extent deemed necessary by that court to render the provision reasonable and enforceable and the remainder of the provisions of this Agreement will in no way be affected, impaired or invalidated as a result.
  110. This Agreement contains the entire agreement between the parties. All negotiations and understandings have been included in this Agreement. Statements or representations which may have been made by any party to this Agreement in the negotiation stages of this Agreement may in some way be inconsistent with this final written Agreement. All such statements are declared to be of no value in this Agreement. Only the written terms of this Agreement will bind the parties.
  111. This Agreement and the terms and conditions contained in this Agreement apply to and are binding upon the Partner's successors, assigns, executors, administrators, beneficiaries, and representatives.
  112. Any notices or delivery required here will be deemed completed when hand-delivered, delivered by agent, or seven (7) days after being placed in the post, postage prepaid, to the parties at the addresses contained in this Agreement or as the parties may later designate in writing.
  113. All of the rights, remedies and benefits provided by this Agreement will be cumulative and will not be exclusive of any other such rights, remedies and benefits allowed by law.

IN WITNESS WHEREOF the parties have duly affixed their signatures under hand and seal on this 26th day of July, 2014.

 

 

 
 

 

__________________________________

 

 

____________________________ (Partner)

 

 

 
 

 

__________________________________

 

 

____________________________ (Partner)

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