You are going into business with one or more partners. But what would you do if one of your partners died, became disabled or left the business? If you and your partners have not entered into a partnership agreement in anticipation of such eventualities, a resulting dispute could affect your partnership and even your business. You should therefore prepare for the unexpected and draw up a partnership agreement.
The purpose of a partnership agreement is to prevent disputes by determining the rights, responsibilities and powers of each partner.
The agreement anticipates certain situations and their impact on management of the business and determines in advance what measures will be taken in the event they occur. If a partner dies or wishes to sell his shares, or if there is a disagreement between two partners, you will know how to settle the matter quickly.
A partnership agreement establishes such things as:
and includes all relevant information concerning management of the business, such as the composition of the board of directors and the purchase and sale of shares.
Think about incorporating a non-competition clause in your agreement. It will prevent a former partner from competing with you as a result of experience acquired in your business.
As is the case for any other type of contract, we recommend that you consult a legal advisor to draw up an agreement that meets your needs. Your legal advisor will ensure that the provisions of the agreement are sufficiently clear and that they are properly set out so that you can avoid any potential disagreement.
This information is presented for information purposes only and should not be considered to be legal or financial advice. For further information, contact a legal or financial advisor.