A Step-by-Step Guide to Drafting a Business Partnership Agreement

Note: Want to skip the guide and go straight to the free templates? No problem - scroll to the bottom.
Also note: This is not legal advice.

Introduction

When entering into a business partnership, it is of utmost importance that each partner understands the risks, benefits, and responsibilities associated with the venture. This is where a thoroughly developed business partnership agreement helps - it serves as a legally binding document which outlines the rights and duties of each party in an organised and clear way. A well-crafted agreement ensures that all parties comprehend the expectations of them and any potential disputes can be worked through.

In addition to protecting all involved, a business partnership agreement also provides structure for how partners will work together. It explains who will undertake certain duties, how decisions are to be made, and what consequences could arise from certain actions. Furthermore, it clarifies what information must be shared between the partners - this helps avoid possible misunderstandings in future or misinterpretation of roles amongst those involved. By formulating this in written form further protects businesses’ reputations as it allows for compliance with regulations within the country which it operates; preventing potential future liability occurring due to unclarified roles or responsibilities.

Finally, a solid business partnership agreement works towards guaranteeing sustainability within the venture by providing a set plan for decision making processes, strategies to be followed, objectives to be achieved etc.; allowing progress on goals set out to be monitored efficiently whilst simultaneously avoiding clashes over ideas or opinions between partners along their journey together.

At its core purpose then, a business partnership agreement works towards ensuring mutual understanding between relevant parties as well as protecting their interests; providing stability within partnerships by establishing legal rules & regulations which everyone must abide by for continued success; without one this can come at significant risk if things go wrong down the line leading to expensive legal battles or other issues such as reputational damage for those involved due to non-compliance with laws & regulations not being properly addressed upfront before taking part in any venture together.

To help you navigate your way through drafting such an important document Genie AI has created ‘the world’s largest open source legal template library’. Here you’ll find datapoints provided by Genie AI gauging what market-standard agreements look like allowing anyone access to high quality documents free of charge – saving hundreds on lawyer fees but still achieving quality assurance when documenting your next business venture!
So read on below for our step-by-step guidance on drafting your own Business Partnership Agreement today and learn more about how you can access our template library now!

Definitions (feel free to skip)

Parties: The individuals or entities involved in an agreement.
Expectations: The requirements or standards for an agreement.
Ownership: Possession of something.
Control: The power or right to manage or influence something.
Division of profits and losses: The splitting of the gains and losses resulting from an agreement.
Roles and responsibilities: The duties and obligations of each party involved in an agreement.
Terms and conditions: The rules and regulations of an agreement.
Governing law: The set of laws and regulations that an agreement must follow.
Confidentiality: Keeping information secret.
Non-disclosure agreement: A contract that prevents one party from disclosing confidential information.
Termination clause: A part of an agreement that outlines when and how the agreement can be ended.
State or federal regulations: Laws that must be followed by the parties involved in an agreement.
Registration process: The steps taken to officially record or document an agreement.
Licensing requirements: The criteria that must be met in order to legally operate in a certain field.
Dispute resolution process: The steps taken to settle disagreements between the parties involved in an agreement.
Executing the agreement: Formally completing an agreement.
Storing the agreement: Safekeeping of the agreement.
Providing copies: Sharing physical or digital copies of the agreement.
Understanding and agreeing: Acknowledging the terms of an agreement and accepting them.
Monitoring performance: Keeping track of the progress of an agreement.
Reviewing periodically: Examining an agreement regularly.
Updating: Making changes to an agreement.
Keeping records: Documenting all activities related to an agreement.
Resolving disputes: Settling disagreements between the parties involved in an agreement.
Terminating: Ending an agreement.
Documenting termination: Recording the end of an agreement.

Contents

• Identifying the parties involved in the agreement, including contact information
• Defining the purpose and scope of the partnership, including expectations of the parties involved
• Establishing the ownership and control of the partnership, including the division of profits and losses
• Setting out the roles and responsibilities of each partner, including their contribution to the partnership
• Outlining the terms and conditions of the agreement, such as the duration of the partnership and any dispute resolution procedures
• Establishing the governing law for the agreement and any applicable state or federal regulations
• Addressing the issue of confidentiality, including a non-disclosure agreement
• Drafting a termination clause, including the conditions for termination and the rights of each partner after the termination
• Creating a registration process, if required, and addressing any licensing requirements
• Creating a dispute resolution process and outlining the process for resolving conflicts
• Drafting the agreement and having it reviewed by a lawyer
• Executing the agreement and obtaining signatures from all parties involved
• Storing the agreement securely and providing copies to each party
• Ensuring that all partners understand and agree to the terms of the agreement
• Monitoring the performance of the agreement and reviewing it periodically
• Updating the agreement as needed to reflect any changes in the partnership
• Keeping records of all activities related to the agreement
• Resolving any disputes that arise between the partners in accordance with the agreement
• Terminating the agreement according to the terms outlined in the agreement
• Documenting the termination of the agreement and informing all parties of the termination

Get started

Identifying the parties involved in the agreement, including contact information

• Establish the names and roles of each partner in the agreement
• Collect the contact information for each partner, including address, phone number and email address
• Make sure all contact information is as up-to-date and accurate as possible
• When finished, create a list of all parties involved and their contact information
• Check off when the list is complete and the contact information has been collected and verified for accuracy, and move on to the next step.

Defining the purpose and scope of the partnership, including expectations of the parties involved

• Outline the purpose of the partnership, including what each party expects to get out of it
• Set clear expectations for the scope of the partnership, including any limits or boundaries
• Specify any commitments or obligations of the parties involved
• Set a timeline for when activities should be completed or goals should be achieved
• Include details of the decision-making process, such as who has the authority to make decisions
• Agree on how the partnership can be terminated
• Outline the procedures for resolving disputes

Once you have outlined the purpose and scope of the partnership, including expectations of the parties involved, you can check this off your list and move on to the next step of establishing the ownership and control of the partnership, including the division of profits and losses.

Establishing the ownership and control of the partnership, including the division of profits and losses

• Decide on the percentage of the profits each partner will receive
• Determine how losses will be distributed between partners
• Assign voting rights to each partner based on the agreement
• Identify who will control the management and operations of the partnership
• Create rules for how decisions will be made, including a majority vote or unanimity
• Agree on how to handle major decisions, and who will have the ultimate authority
• Outline what happens when a partner leaves or passes away
• Specify how profits and losses will be distributed
• Document any additional details related to the ownership and control of the partnership

When you can check this off your list and move on to the next step:

• You have established the ownership and control of the partnership, including the division of profits and losses
• You have all agreed on the details of the ownership and control
• All partners have signed off on the agreement

Setting out the roles and responsibilities of each partner, including their contribution to the partnership

• List the roles and responsibilities of each partner - include information such as who will make decisions, who will provide services, who will be responsible for what tasks and who will lead the partnership.
• Outline the contributions each partner will make to the partnership - this could include financial contributions, investments, services and resources.
• Consider how the partnership will handle changes in responsibilities or contributions - this could include changes to the division of profits and losses.
• Agree on how decisions will be made, who will be responsible for day-to-day operations and how disagreements between partners will be managed.
• Once all roles, responsibilities and contributions have been established and agreed upon, you can move on to the next step in the guide.

Outlining the terms and conditions of the agreement, such as the duration of the partnership and any dispute resolution procedures

• Outline the starting and ending dates of the partnership
• Identify any time frames for certain tasks to be completed
• Establish procedures for the resolution of any disputes between the partners
• Describe the process for terminating the partnership
• Outline the circumstances in which the partnership may be terminated
• Specify the process for any changes to the agreement
• Describe any other terms and conditions of the agreement

You’ll know that you’ve completed this step when you have outlined all the necessary terms and conditions of the agreement, including the duration of the partnership, dispute resolution procedures, and any other applicable conditions.

Establishing the governing law for the agreement and any applicable state or federal regulations

• Review the applicable state and federal laws that will apply to the agreement.
• Ensure that the governing law for the agreement is included and clearly stated in the document.
• If applicable, include any applicable state or federal regulations that must be adhered to.
• Make sure to include any additional clauses and terms that are necessary to comply with state or federal regulations.
• Once all applicable laws and regulations have been reviewed, included, and stated, you can check this off your list and move on to the next step.

Addressing the issue of confidentiality, including a non-disclosure agreement

• Include a clause in the agreement that states the parties involved agree not to disclose confidential information shared between them
• Specify what information must remain confidential, such as trade secrets, business plans, customer lists, and any competitively sensitive information
• Include a non-disclosure agreement that is legally binding and specifies the consequences for breaching the agreement
• Specify the duration of the non-disclosure agreement and what actions are taken if the agreement is breached
• Make sure to include a clause that states the non-disclosure agreement remains in effect even after the agreement is terminated

You’ll know you can check this off your list and move on to the next step when all parties involved have agreed to the confidentiality clause, including the non-disclosure agreement, and the agreement is signed.

Drafting a termination clause, including the conditions for termination and the rights of each partner after the termination

• Determine what type of termination clause you want to include in the agreement (mutual, unilateral, or for cause)
• Decide the conditions that will lead to the termination of the partnership
• Outline the rights of each partner in the event of termination
• Make sure the termination clause is detailed, clear, and in compliance with state and federal laws
• Once the termination clause is finalized and agreed upon, the agreement is ready to be signed and finalized
• You’ll know you can move on to the next step once the termination clause is included in the agreement and all parties have agreed to the terms.

Creating a registration process, if required, and addressing any licensing requirements

• Determine if the partnership requires any form of registration or licensing.
• Research local, state, and federal laws that may apply to the partnership.
• If necessary, register the partnership with the appropriate governmental body.
• Outline any licensing requirements for the partnership in the agreement.
• Include any applicable fees or taxes that may be associated with registering and licensing the partnership.

When you have completed this step, you should have a clear understanding of any registration or licensing needs for the partnership, and you will have included any applicable information in the agreement.

Creating a dispute resolution process and outlining the process for resolving conflicts

• Determine the type of dispute resolution process that is most suitable for the business partnership, such as mediation, arbitration or litigation.
• Outline any rules and regulations that will govern the dispute resolution process.
• Identify any court of jurisdiction that will govern the dispute resolution process.
• Agree on which provisions will be enforced during the dispute resolution process.
• Determine the time frame for resolving the dispute.
• Establish the cost of the dispute resolution process.
• Create a notice of dispute resolution process that outlines the purpose, scope and timeframe of the process.
• Have the agreement reviewed by a lawyer to ensure it is legally binding and compliant.

Once these steps have been completed, you can check this off your list and move on to the next step.

Drafting the agreement and having it reviewed by a lawyer

• Draft a partnership agreement that outlines the rights, responsibilities, and obligations of each party
• Have the agreement reviewed by a lawyer to ensure it is legally binding
• Make any necessary revisions to the agreement based on the lawyer’s feedback
• Double-check that the agreement meets all legal requirements
• Once the agreement is finalized, you will know you can move on to executing the agreement and obtaining signatures from all parties involved.

Executing the agreement and obtaining signatures from all parties involved

• Have all parties involved in the agreement sign the agreement in the presence of a notary public
• Ensure that all signatures are witnessed, date and notarized
• Obtain a copy of the agreement with all original signatures
• Make sure all parties involved receive a copy of the signed agreement
• When all steps are completed, you can check this off your list and move on to the next step.

Storing the agreement securely and providing copies to each party

• Make extra copies of the signed partnership agreement and store them securely
• Provide copies of the agreement to each of the partners
• Make sure the copy each has is identical to the other copies
• Keep the original copy in a secure location such as a safe or lockbox
• Ensure that each partner has access to the agreement if they need to review it in the future
• When all partners have been provided copies of the agreement, check this step off your list and move on to the next step.

Ensuring that all partners understand and agree to the terms of the agreement

• Meet with all parties to discuss the agreement and ensure that all understand and agree to its terms
• Review each section of the agreement to ensure that all parties have a full understanding of the rights and responsibilities of each partner
• Answer any questions the partners may have about the agreement
• Obtain signed copies of the agreement from each partner
• When all partners have signed the agreement and have a full understanding of its terms, you can move on to the next step.

Monitoring the performance of the agreement and reviewing it periodically

• Establish a timeline for reviewing the agreement and set reminders for when a review should happen
• At the scheduled review, meet with all partners to discuss the performance of the agreement and whether any changes need to be made
• Have each partner review the agreement and provide feedback
• Update the agreement as needed to reflect any changes in the partnership
• Once all partners agree to the updated agreement, have it signed
• Check off this step when all partners have reviewed the agreement, any necessary changes have been made, and the updated agreement has been signed.

Updating the agreement as needed to reflect any changes in the partnership

• Identify the changes that need to be included in the agreement
• Investigate the legal implications of the changes
• Discuss the changes with your partner(s)
• Draft new clauses for the agreement to reflect the changes
• Have a lawyer review the updated agreement
• Have all partners sign the updated agreement
• File the updated agreement with any relevant government bodies

Once all the steps have been completed, you can check this off your list and move on to the next step.

Keeping records of all activities related to the agreement

• Maintain a document tracking all activities related to the agreement, such as meetings, emails, and phone calls
• Track the date and time of each activity, as well as who was involved
• Make sure that all documents related to the agreement are properly labelled and stored securely
• Update the document tracking activity regularly
• When all activities related to the agreement have been tracked and stored correctly, you can check this off your list and move on to the next step.

Resolving any disputes that arise between the partners in accordance with the agreement

• Identify a dispute resolution process that is agreeable to all partners and include it in the agreement.
• Make sure that each partner is aware of the dispute resolution process, and that they understand how to use it.
• If the dispute cannot be resolved through informal discussion, then the dispute resolution process should be followed.
• Agree to allow a neutral third party to mediate the dispute if necessary.
• Ensure there are specific language and provisions in the agreement that outline the dispute resolution process.

How you’ll know when you can check this off your list and move on to the next step:

• Once you have agreed on a dispute resolution process and all parties have signed off on it, you can move on to the next step.

Terminating the agreement according to the terms outlined in the agreement

• Review the termination clause of the agreement to understand how and when the agreement can be terminated.
• Make sure that all parties are aware of the terms and conditions of the termination clause.
• Follow the procedures specified in the agreement to terminate the agreement.
• Notify all parties involved in the agreement of the termination.
• Complete any other necessary steps to formally terminate the agreement.

How you’ll know when you can check this off your list and move on to the next step:

• Once all parties have been informed of the termination and the necessary steps have been completed, the agreement can be deemed officially terminated.

Documenting the termination of the agreement and informing all parties of the termination

• Draft a termination document that outlines the date the agreement is being terminated and the reasons for the termination.
• Have all parties sign the termination document.
• Send a copy of the termination document to each party.
• Keep a copy of the termination document for your records.

When you have completed these steps, you can move on to the next step.

FAQ:

Q: What does a SaaS business model mean in the context of a business partnership agreement?

Asked by Sarah on 03/04/2022
A: A SaaS (Software as a Service) business model is a way for companies to provide software services to their customers. Businesses typically offer their customers a subscription service or pay-as-you-go access to their software. In the context of a business partnership agreement, this type of model can be used to provide access to services and software between two parties. This could include services such as cloud storage, analytics, or customer relationship management tools. It’s important to ensure that any agreement you enter into clearly outlines each partner’s responsibilities and the terms of the partnership.

Example dispute

Possible lawsuits referencing business partnership agreement

• A plaintiff might successfully raise a lawsuit referencing a business partnership agreement if they feel that their partner has violated the terms and conditions of the agreement.
• The plaintiff must provide evidence to support their claim, such as emails or correspondence, or other documents which indicate that the agreement has been breached.
• The defendant must then be served papers notifying them of the lawsuit.
• The court will then review the evidence and make a decision as to whether the plaintiff has a valid claim.
• If the court decides that the plaintiff has a valid claim, it will then determine the amount of damages to be awarded, if any.
• The court may also order the defendant to take certain actions to rectify the breach of the agreement.
• In some cases, the court may order the parties to enter into mediation to reach a settlement.
• If the parties are unable to reach a settlement, the court may decide the case in favor of one party or the other.

Templates available (free to use)

Band Partnership Agreement Between Band Members
Corporate Partnership Agreement
Deed Of Adherence To A Partnership Agreement To Admit A New Partner Existing General Partnership
Deed Of Adherence To A Standard Limited Liability Partnership Agreement
Domestic Partnership Agreement
Farming Partnership Agreement Family Farming
In Depth Partnership Agreement General
Joint Venture Partnership Agreement
Local Authority And Nhs Body Partnership Agreement Nhs Act 2006 Section 75
Partnership Agreement Form
Short Form Partnership Agreement Uk
Standard Limited Partnership Agreement England
Strategic Partnership Agreement

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