Business partnership agreements are often times a very important part of any business deal. Whether you are looking to enter a new business or expand an existing business, understanding the importance of a business partnership agreement can help ensure that everything is legally squared away. A business partnership agreement is actually a legal document which both sets out the conditions and terms agreed upon by all involved and clearly dictates how the business runs. Any significant clauses must be included in the agreement, such as those designed to make sure any legal conflict which may arise can be resolved easily. Such issues can range from share ownership to business expansion, and everything in between.
A business partnership agreement covers a number of important areas, including how the partners will resolve any disputes which may occur, as well as defining and maintaining the partnership’s interest and control. It will also cover any debts which may have accrued between the partners and what these assets and debts are. This will prove useful should problems arise, such as disagreements between the partners.
One of the major aspects of this type of agreement is the method of negotiation used. You may want to use the services of a lawyer, or attempt to negotiate everything on your own. However, doing so without the advice of an attorney may be disastrous for you. As a general rule, lawyers recommend that all but the most limited of partnerships be settled via negotiation. This is because, while an arbitrator or independent mediator may be able to sort out some of the issues more quickly, the process of negotiation can more thoroughly protect all parties involved.
Business partnership agreements must be legally binding and cannot be broken or evaded. If one of the business partners decides to abscond, the other partner will be legally obligated to pursue the claim diligently. For this reason, it is extremely important to make sure that everything is legally binding.
Many people, when preparing business partnership agreements, assume that they can draft their own version. While it is possible to draw up your own written version, it is better to avoid such a temptation. Unless you are a business professional with extensive legal experience, it is best to avoid the task. A business partnership agreement should only be written with the help of a competent attorney. Not only will a highly experienced attorney be able to write a legally binding contract, but they will also be able to protect his or her client’s interests. Your attorney will understand exactly which laws apply to your specific situation and which ones apply to all business partners.
While drafting a business partnership agreement may seem like an intimidating task, it is important not to allow doubt to cloud your perspective. All business partners should read the document carefully and make sure it fully expresses their expectations and commitments to each other. Mistakes in drafting business partnership contracts are often the result of poor communication or reluctance on the part of the partner to explain their expectations.
Once a business partnership agreement has been drafted and signed by all parties involved, it should be available for future use. While it is customary for the partners to terminate their business partnership agreement after a termination date has been reached, many owners do not wish to do so. If the partners decide to continue the venture, it is important to include language stating the date of termination, the amount of notice required, and the procedure for doing so (typically, if one partner leaves, the other must also notify the other of his or her intent).
In short, drafting business partnership agreements can prove to be a time-consuming task for small business owners. However, the agreements created can help ensure that all parties remain on track and the venture does not fall apart. In addition, by having such documents drafted professionally and clearly, there is less risk of misunderstanding between the various parties. This can prove vital in the event of a lawsuit that arises from any of the agreements broken or misunderstood during the course of the venture. By taking steps to draft effective operating agreements and business partnership agreements, small business owners can ensure the future success of their ventures.