5 Clauses Every Partnership Agreement Needs

Business partnerships can be challenging but rewarding. Instead of navigating the complicated waters of building a business alone, you’ll have someone by your side. However, without the right legal paperwork in place beforehand, you could both put yourselves at risk for issues. A Partnership Agreement can protect your personal and business assets if for some reason the work arrangement doesn’t work out, but it’s important that it’s all inclusive. Here are five key clauses you should make sure you include in your partnership agreement.


You may be able to stave off a partnership dispute before it can even start by clearly outlining each partner’s responsibilities from the start. Come to an agreement on each of your strengths and weaknesses and divide responsibilities up based on that information.

Financial Contribution

An essential part of forming a business partnership is financing. If each of you is pitching in a certain amount at the outset, make sure that’s on paper. Also outline any equity shares this contribution buys in the company so there are no disputes about it down the road.


It’s important to outline how you and your partner will be paid. If you plan to take a salary, flesh out how much each partner will earn during each pay period, as well as the frequency of those payments. If you each plan, instead, to share in a portion of the profits, outline this arrangement, as well.

Dispute Resolution

Even the best-structured business partnerships will occasionally encounter bumps in the road. When this happens, it’s important to have a resolution plan in place. Is there an impartial third party that can act as a mediator? If you both agree that you can call on this person in the event of a dispute, put it in writing for later reference.


Unfortunately, every business partnership will eventually come to an end. Hopefully it will be later rather than sooner, but you should include verbiage in your partnership agreement to cover how dissolution will be handled. How will assets be divided? Outline the percentage of ownership and how this will come into play if the partnership doesn’t work out.

Business partners will inevitably disagree at least occasionally, but a full-blown partnership dispute can be problematic. With the right legal documents in place, though, business partners can not only potentially avoid disputes in the first place, but they’ll also have the tools necessary to resolve them quickly and easily if they do.

Do you need some guidance on constructing your partnership agreement? Contact us today and avoid these issues before they happen. Without the right legal paperwork in place, you will be putting yourselves at risk for some major issues.

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