Set appropriate terms in a partnership agreement
On behalf of Kadish & Associates Law Group posted in Business Litigation on Wednesday, December 12, 2018.
Some business disputes happen when partners don’t comply with the terms of their partnership. This is a difficult position to be in because it can directly impact the company. It is a reason why anyone who is considering going into business with another person should have a clear partnership agreement in place.
A partnership agreement outlines how the business relationship will work. It should cover everything from who makes which decisions, how profits are split, what rights each person has and what each person is responsible for. It should also include information about how one party can leave the business if they desire.
You and your future partner have to come up with the terms of the agreement together. You should discuss what specific points you each want to see included in the document so that you can make decisions about some bigger points before the business gets started. The more detailed the document is, the better chance you will have for your partnership to thrive.
Another good reason to have a partnership agreement is that it sets the expectations for each owner. For example, you know that if you are responsible for the financial aspect of the business that you will be held accountable if there are miscalculations. Your partner will know to come to you if something is amiss, but you will know to go to them if there is an issue with inventory if that is something they are accountable for.
Remember that the purpose of the partnership agreement is to protect the business. If there comes a time when your partner is failing to abide by the terms, it might be time to consider legal action.