Partnership Agreement Template

A partnership agreement is a written document between business partners outlining how their partnership operates. It clearly defines responsibilities, rights, and expectations, helping avoid conflicts down the road. Download a free, customizable template, learn about the key clauses to include, how to confidently protect your business interests and sign everything securely using Sign.Plus.

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partnership agreement free contract template online

What is a Partnership Agreement?

Business partners use operating agreements to ensure clarity and prevent misunderstandings that could negatively impact the business. While not always legally required, these agreements are valuable in establishing a solid foundation for a mutually beneficial relationship.

When should you use a Partnership Agreement?

While verbal agreements can be appealing because they're quick, they're often unclear and hard to enforce. A written partnership agreement helps prevent misunderstandings and provides a clear path to resolving disputes. It clarifies everything up front, making future interactions smooth and hassle-free.

Some common use cases of business partnership agreements:

Forming a new business
Adding a new partner to an existing business
Changing the structure of a partnership
Resolving disputes

Types of Partnerships

General Partnership: All partners share management responsibilities and liability.
Limited Partnership (LP): Includes general partners who manage the business and limited partners who invest but do not manage daily operations.
Limited Liability Partnership (LLP): Partners have limited personal liability for business debts, protecting personal assets.
Limited Liability Company (LLC): LLC operating agreements offer limited liability to its members (similar to a corporation) but is taxed like a partnership.

Download your business partnership agreement template as a Word doc now. Use Sign.Plus to easily edit, fill out and sign your partnership online.

Why might you need a Partnership Agreement?

Without one, your business defaults to state partnership laws—rules that rarely fit how you want to operate. A customized agreement lets you:

Allocate profits and losses fairly. Divide returns according to each partner’s actual investment of money, time, or expertise instead of an automatic 50/50 split.
Clarify decision‑making. Define voting thresholds or assign specific partners authority so important choices and day‑to‑day actions don’t stall.
Plan for change. Spell out buy‑outs, succession, and what happens if a partner leaves or dies, preventing unwanted dissolution or asset distributions.

Customize your partnership agreement template and sign it online

We’ve created this business partnership agreement template to save you time and money when it comes to streamlining business operations. With Sign.Plus, these documents can be signed online right away. You just need to customize the contract template based on your own requirements and send it for signature through our fully encrypted dashboard.

Sign.Plus is a secure and legally-binding electronic signature solution that allows you to sign and send documents from anywhere, at any time, using any device. Our platform is secure, reliable, and user-friendly, so you can focus on what matters most, growing your business.

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How to Write and Fill out a Partnership Agreement?

Step-by-step guide to fill out Sign.Plus's Partnership Agreement template

Formulation and Purpose of Partnership

To start, clearly define the partnership's legal structure and the nature of its business activities. Your partnership agreement should include essential details such as the partnership's name and a description of the business, ensuring that it complies with local laws.

Place of Business

Specify the primary location where the partnership's business activities will be conducted. Include the address of the main office or facility, and mention if the partnership may operate additional locations.

Term of Partnership

Specify the duration of the partnership, including the start date and the conditions under which the partnership will end. This clause should define whether the partnership has a fixed term, ending on a specific date, or if it will continue indefinitely until certain events occur, such as the withdrawal of a partner or mutual agreement to dissolve. Additionally, include any provisions for extending or renewing the partnership term if desired.

Capital Contributions

To draft the Capital Contributions clause, specify the amount and form of contributions each partner will provide to start and sustain the business. Detail whether these contributions will be made in cash, property, or services, and outline any necessary conditions for these contributions.

Profit and Loss Allocation

Building on the previous section, the distributions clause in general partnership agreements clarifies how profits and losses are allocated among the partners. It should specify the timing and method for repaying partners for their contributions and outline how they will receive their share of the profits.

Binding Authority

To draft the Binding Authority clause in a partnership agreement, specify whether partners have the authority to bind the partnership in contracts, especially in legal and financial matters. This clause should outline the decision-making process and document how actions taken on behalf of the partnership are recorded. Be sure to clearly define the scope of authority, including any limitations or required approvals for specific actions.

Admitting a New Partner

To draft this clause, specify the criteria and process for admitting new partners to the partnership. Include essential requirements such as as obtaining unanimous consent from existing partners and detailing the terms under which a new partner will be admitted.

Management

Management clause in a general partnership agreement should outline the structure of the partnership, detailing how decisions are made. Specify the roles of managing partners, restrictions, the process for making decisions, and any voting rights.

Partnership Property

Detail the ownership and use of property and assets within the partnership. As needed, specify rights of partners concerning these assets. This clause should also address the handling of property contributed by individual partners, distinguishing between personal and partnership property, and include provisions for property use, maintenance, and disposal.

Duties and Responsibilities of Partners

In this clause, clearly define the obligations of each partner in managing and contributing to the partnership. Detail specific roles, expected time commitments, and the scope of each partner's responsibilities.

Withdrawal and Retirement

To address Withdrawal and Retirement, specify the process and conditions under which a partner may withdraw or retire from the partnership. Include notice requirements, the method for valuing and distributing the withdrawing partner's interest, and any restrictions or penalties for early withdrawal. This clause should also outline the rights and obligations of the remaining partners in such scenarios.

Dissolution

Describe the circumstances under which the partnership may be dissolved, whether voluntarily or involuntarily. Specify the process for winding up the partnership's affairs, including the distribution of assets and the settlement of liabilities. Detail any specific events that would trigger dissolution and the steps partners must take to conclude the partnership business.

Non-Compete Clause

Outline any restrictions on partners engaging in competing businesses during and after their time with the partnership. This clause aims to protect the partnership's interests and prevent conflicts of interest.

Dispute Resolution

To outline the methods for resolving disputes among partners, specify the process for resolving disagreements and whether any specific rules or laws will govern the resolution process. Include provisions for choosing arbitrators or mediators and any steps required before resorting to formal dispute resolution.

Amendments

The Amendments clause should describe the process for making changes to the partnership agreement. Specify the level of consent required from partners to approve amendments, whether it be a simple majority or unanimous agreement. Detail the procedure for proposing and adopting amendments, ensuring that all partners are notified and have the opportunity to participate in the decision-making process.

Governing Law

The Governing Law clause specifies the jurisdiction and laws that will govern the partnership agreement. This clause ensures that any legal matters arising from the agreement are resolved under the appropriate legal framework, providing clarity and predictability for the partners.

Entire Agreement

Here, declare that the written partnership agreement represents the complete and final agreement between the partners. This clause ensures that all terms are consolidated into a single document, providing a clear and comprehensive reference for the partners.

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Frequently Asked Questions

What is the difference between a Partnership Agreement and an Operating Agreement?

Partnership agreements are a legal contract between two or more individuals who come together to run a business. The business agreement outlines the terms of the partnership, including ownership stakes, profit and loss sharing, decision-making processes, and dispute resolution. An LLC operating agreement on the other hand, is a legal document used by Limited Liability Companies (LLCs) to establish how the business will be run. It covers similar topics to a partnership agreement but is tailored to the LLC structure.

What are the 4 types of partnership?

There are four main types of partnerships:
1. General Partnership: All partners share in the management and profits/losses.
2. Limited Partnership: At least one general partner manages the business and assumes unlimited liability, while limited partners invest but have limited liability.
3. Limited Liability Partnership (LLP): Similar to a general partnership, but partners have limited liability for the debts and actions of other partners.
4. Limited Liability Company (LLC): LLC operating agreements offer limited liability to its members (similar to a corporation) but is taxed like a partnership.

Can I write my own Partnership Agreement, or do I need a lawyer?

While it's possible to write your own general partnership agreement, it's highly recommended to consult with a lawyer. Business law is complex, and a well-drafted business agreement can protect your interests and prevent disputes. A lawyer can help you understand the legal implications, ensure the business partnership agreement complies with relevant laws, and address potential issues.

Why is a Partnership Agreement important?

A business agreement is important because it is essential for safeguarding your business and relationships. It serves as a roadmap, outlining the roles, responsibilities, and financial arrangements between partners. By formalizing expectations and decision-making processes, it prevents misunderstandings and potential disputes. Additionally, a well-drafted agreement protects personal assets, facilitates smooth operations, and provides a clear path for the partnership's future, including the admission of new partners, the exit of existing ones, and the dissolution of the business.

Download Free Partnership Agreement Template Now!

Use Sign.Plus to streamline your agreements today.
Download and customize our contract now to meet the unique needs of your business.

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DISCLAIMER: The information on this site is for general information purposes only, and Sign.Plus cannot guarantee that all the information on this site is current or accurate. This is not intended to be legal advice and should not be a substitute for professional legal advice. For legal advice, consult a licensed attorney regarding your specific legal questions.

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