3 Things Your Partnership Agreement Needs to Discuss
Jan. 19, 2022
If you are in a partnership, the last thing you want is to be locked in a dispute with your business partner. A conflict is likely to affect operations and prove costly to the business in terms of time and money spent in resolving it. Therefore, it is essential to have a good partnership agreement that will set things straight from the start.
It’s all in the details and the provisions of your partnership agreements. A well-drafted agreement can go a long way in preventing disagreements among partners. If you are in a partnership or intend to start one, here are some important considerations you should have in your partnership agreement.
In most instances, disputes among business partners revolve around finances. Therefore, your partnership agreement should define each partner’s stake in the business and how the partners will share profits and losses.
Your business agreement should also specify how all the business operations should be managed. Running a partnership business can get complicated, especially if partners’ roles are not well defined. Assigning each partner their role will ensure no misunderstandings when it comes to making decisions relating to important aspects of the business.
A partnership agreement should provide direction on dealing with conflicts among the partners. Disputes and misunderstandings are almost inevitable when running a business, which is why your agreement needs to have a dispute resolution process, just in case.
The prosperity of your business depends on how well you relate with your partners. While it is important to explore alternative ways of settling any disputes, you need to be prepared if things play out in court. Litigation should be a last resort, but you don’t want to be caught flat-footed when it comes to that point.