Choosing to pursue common commercial objectives with others can be an exciting prospect – to ensure the success of your new venture, it is essential to have a solid foundation in place to help your business develop and avoid disputes arising further down the line. We can offer straightforward, pragmatic contract advice from the outset to help you clearly set out the duties and obligations of all partners to the enterprise.
There are several legal structures available for those who wish to enter into business together. For those opting to form a partnership, a partnership agreement will act as a contract that enables those in charge of the enterprise to put in their money, time and skills with a clear understanding about how profits and losses will be shared between the parties.
Why do I need a Partnership Agreement?
Without a comprehensive partnership agreement in place, you run the risk of serious consequences. You can avoid these with a partnership agreement. For example, you might be forced to close the business if one partner dies or a dispute causes one partner to resign.
Businesses that are organised, with clear, well-thought-out agreements in place are in the best position to achieve success.
What does a Partnership Agreement cover?
Partnership agreements can take many forms – often this will be dependent on the needs of the business and the role played by the individual partners. However, it is likely that all partnerships will have to consider certain key factors and legal advice should be sought.
These factors are likely to include:
The length of time that the partnership will endure is a fundamental consideration. In some cases, it may be appropriate that the partnership will continue for the lifetime of the partners, but in others, a fixed period will be more suitable. Your partnership agreement can specify a specific timeframe that has been agreed upon by all the partners, or how it can be brought to an end if required. This might happen when one partner gives notice or may include an option for the other partners to continue when one withdraws.
Capital and Assets
Your partnership agreement should set out explicitly what funding is to be provided by each partner. If your business requires an additional injection of capital, the partnership agreement can be used to establish how this should be achieved and to what extent the individual partners are expected to contribute. If particular partners are going to provide assets to get the business going, then it is important to state who owns these assets – will they remain with the partner or will they then be held by the partnership? Assets such as business premises can also be covered in the partnership agreement.
Profit & Loss
How any profits or losses will be shared between the partners and at what point funds can be withdrawn are an essential consideration. This, along with many other essential decision-making provisions, can be addressed in the partnership agreement.
We have many years of experience advising commercial clients across Australia from sole traders to start-ups and multinational firms. Whatever your requirements, our partnership agreement solicitors will take the time to get to know you and your business on a personal level, delivering exceptional legal advice that is uniquely tailored to your needs.