Partnership agreement

A partnership agreement is a written or oral agreement that governs decision making within a partnership, as well as how key decisions are handled. A partnership agreement should include information or provide instructions about the following topics:

  • The names of the partners
  • The amounts contributed by each partner
  • The rights and responsibilities of each partner
  • Whether partners are designated as general partners or limited partners
  • The proportions of partnership gains and losses to be apportioned to each partner
  • Procedures related to the withdrawal of funds from the partnership, as well as any limitations on these withdrawals
  • How key decisions are to be resolved
  • Provisions regarding how to add partners and terminate partners
  • What happens to partnership interests if a partner dies
  • What steps to follow to dissolve the partnership

If a partnership agreement does not include the preceding topics, then there is a risk of acrimony among the partners when a decision must be made, and there is no formal guidance regarding how to proceed.

Similar Terms

A partnership agreement is also known as articles of partnership.

Related Courses

Law Firm Accounting 
Partnership Accounting 
Partnership Taxation