United States Legal Documents


Partnership agreements

This range of US partnership documents enable various types of partnerships to be established and set out the obligations and powers of the partners.

12

How to enter into a business partnership agreement

Introduction

If you intend to operate a business it is important to identify the most appropriate and effective legal relationship for you and any business colleagues; there are a number of different ways to structure this relationship, and different laws govern different relationships (see related article How to structure your business).

Under the partnership option, two or more parties enter into a contract to carry on business together with a common purpose. Because the relationship between the individuals is at law a contractual one, the relationship gives rise to rights and duties that are legally binding between the partners.

How does a partnership work?

Partnership involves a contract between the partners to engage in a business in order to make a profit. Assets and responsibilities are shared by the partnership. Unlike a company, a partnership is not a separate legal entity, even though the number of partners may be large. A partnership is, however, required to file tax returns.

In general, each partner contributes either property, skill or labour, although a partner may contribute nothing and still have the rights of a partner. A partner that contributes property but no labour is usually referred to as a "sleeping partner".

The term "firm" is used to refer collectively to the individuals who make up the partnership.

The PARTNERSHIP ACT 1908 sets out much of the law about partnerships, although it may be overridden on particular matters by the particular partnership agreement (see below).

Does the partnership have to registered with any government office?

Unlike a company, an ordinary partnership does not have to be registered. However, "special partnerships" must be registered with the High Court; these partnerships allow a person to be a partner on the terms that his or her liability to the firm's creditors will be limited, like that of a shareholder in a limited-liability company

The partnership agreement

It is advisable to enter into a written partnership agreement. Partnerships are usually regulated by written agreements, sometimes called "articles".

Many of the provisions of the PARTNERSHIP ACT 1908 apply only if there is no provision for the matter in question in the partnership agreement; therefore the partnership agreement may override these rules in the Act.

Even though there is a written partnership agreement, the partners may vary the agreement orally.

What should be included in the partnership agreement?

Written partnership agreements commonly include the following:

  • the name of the firm
  • a description of the business to be conducted and the place where it is to be carried on
  • whether the business is for a single venture (for a specified term) or whether it is ongoing
  • who is contributing to the capital and in what amount
  • how the profits are to be divided among the partners
  • how disputes between the partners are to be resolved, such as by arbitration
  • who the partnership's bank and accountant are to be
  • who will be entitled to sign cheques on behalf of the partnership
  • procedures for withdrawing from the partnership or admitting new partners

Husband-and-wife farming partnerships & ACC: Why you should have a written agreement

If you and your spouse operate a farm together, you may well not have a written agreement unless you have been farming for some years, because since 1983 Inland Revenue has not required husbands and wives to have written agreements for tax purposes. But the policy of the Accident Compensation Corporation (ACC) on compensation for replacement labour makes a written agreement desirable.

If you or your spouse is injured and unable to work for a period, ACC will not pay full compensation for the cost of employing replacement labour. ACC will pay only 80 percent of half of that cost, its reasoning being that the other partner (your spouse) should carry half the cost, as he or she would with other partnership costs.

But if you have a written partnership agreement, and the agreement says that an injured partner has an obligation to meet the entire cost of the replacement labour, ACC will pay 80 percent of the replacement labour costs.

Cautionary notes

  • It is essential that you seek advice from a lawyer before deciding which legal structure you should adopt.
  • If you choose a partnership, you are in a legally binding relationship with your partners, and you should obtain full legal advice as to the extent of your various rights and obligations.
  • You will need to decide if you wish to register the partnership for GST. You should take advice from an accountant about this.

How to structure your business

Introduction

If you are intending to buy or establish a business (see related articles How to buy a business ), you will need to consider how you should structure it. There are a number of options to consider, and these are listed below.

Sole trader

Operating as a sole trader is the simplest form of operation and suits many small businesses. The individual personally owns all assets and receives all profits, but also personally bears all responsibilities and all liability for losses.

Partnership

Under the partnership option, two or more parties carry on business with a common purpose. (The term "firm" is used to refer collectively to the individuals who make up the partnership.)

This form of operation has many of the advantages of a sole trader, but the assets and responsibilities are shared by the partnership. Unlike a company, a partnership is not a separate legal entity. It is, however, required to file tax returns. (See How to enter into a business partnership agreement ).

As well as ordinary partnerships, there are also "special partnerships", which allow a person to be a partner on the terms that his or her liability to the firm's creditors will be limited, like that of a shareholder in a limited-liability company (see below). Unlike the ordinary partnership, a special partnership must be registered with the High Court.

Limited-liability company

Unlike a partnership, a limited-liability company is a separate legal entity. Among other things, this means that the company can sue and be sued in the name of the company as if it were a natural person.

In general, if the company is liquidated (wound up) the liability of a shareholder of a limited-liability company is limited to any amounts that are unpaid on the shareholder's shares. In practice this transfers the risk of business failure from the shareholders to the business's creditors.

To be registered as a company, a company must have at least one share, one shareholder and one director. You must first reserve a name for the company with the Companies Office, and then apply for the company to be registered and incorporated under the COMPANIES ACT 1993 (see How to form a company ). It is, however, possible to buy an "off-the-shelf" company that has already been registered, and then apply to change the company's name.

Trading trust

Another possible business structure, although not popular in New Zealand, is that of a trading trust. Here, those who own the business are separate from those who receive the benefit of the income from the business (see How to set up a trust).

Cautionary notes
  • It is advisable that you obtain legal advice before setting up your business. Your lawyer will be able to advise you as to which business structure will, for example, limit your personal liability and give you the best tax benefits.

NZ$19.95

An agreement for use by a company or corporation who is admitting an employee as a partner.

Document Delivery Format:Delivery format: Download MS Word or PDF file
Document Source:Complies with US and State law
Document User Guide Available:General instructions and checklist
Document Assembly Method:User fills in template blanks
Document Preview/Sample Available:Document preview: Download partial view of document
Help Support Email/Telephone:Limited - not legal advice
Country:US jurisdiction
State:na
MainSiteUrl:www.findlegalforms.com
NZ$10.95

This kit provides instructions and links for registering your business as a limited liability partnership.

Document Delivery Format:Delivery format: Download MS Word or PDF file
Document Source:Complies with US and State law
Document User Guide Available:General instructions and checklist
Document Assembly Method:User fills in template blanks
Document Preview/Sample Available:Document preview: Download partial view of document
Help Support Email/Telephone:Limited - not legal advice
Country:US jurisdiction
State:na
MainSiteUrl:www.findlegalforms.com
NZ$8.99

A Partnership Agreement allows you to structure your partnership relationship in a way that both serves your business and preserves your rights.

Document Delivery Format:Delivery format: Download MS Word or PDF file
Document Source:Complies with US and State law
Document User Guide Available:General instructions and checklist
Document Assembly Method:User fills in template blanks
Document Preview/Sample Available:Document preview: Download partial view of document
Help Support Email/Telephone:Limited - not legal advice
Country:US jurisdiction
State:na
MainSiteUrl:www.findlegalforms.com
NZ$6.99

A Partnership Agreement is a legal document that memorializes the partnership of two or more individuals (not husband and wife) in a for-profit business endeavour.

Document Delivery Format:Delivery format: Download MS Word or PDF file
Document Source:Complies with US and State law
Document User Guide Available:General instructions and checklist
Document Assembly Method:User fills in template blanks
Document Preview/Sample Available:Document preview: Download partial view of document
Help Support Email/Telephone:Limited - not legal advice
Country:US jurisdiction
State:na
MainSiteUrl:www.findlegalforms.com
NZ$19.95

Useful forms and guidelines to assist you in amending a partnership agreement.

Document Delivery Format:Delivery format: Download MS Word or PDF file
Document Source:Complies with US and State law
Document User Guide Available:General instructions and checklist
Document Assembly Method:User fills in template blanks
Document Preview/Sample Available:Document preview: Download partial view of document
Help Support Email/Telephone:Limited - not legal advice
Country:US jurisdiction
State:na
MainSiteUrl:www.findlegalforms.com
NZ$19.95

Forms and instructions for preparing the necessary paperwork and setting up a new partnership.

Document Delivery Format:Delivery format: Download MS Word or PDF file
Document Source:Complies with US and State law
Document User Guide Available:General instructions and checklist
Document Assembly Method:User fills in template blanks
Document Preview/Sample Available:Document preview: Download partial view of document
Help Support Email/Telephone:Limited - not legal advice
Country:US jurisdiction
State:na
MainSiteUrl:www.findlegalforms.com
NZ$19.95

Helpful forms and instructions to assist in terminating a partnership.

Document Delivery Format:Delivery format: Download MS Word or PDF file
Document Source:Complies with US and State law
Document User Guide Available:General instructions and checklist
Document Assembly Method:User fills in template blanks
Document Preview/Sample Available:Document preview: Download partial view of document
Help Support Email/Telephone:Limited - not legal advice
Country:US jurisdiction
State:na
MainSiteUrl:www.findlegalforms.com
NZ$19.95

Useful tools for determining the details of a partnership's purpose, structure and governance prior to its formation.

Document Delivery Format:Delivery format: Download MS Word or PDF file
Document Source:Complies with US and State law
Document User Guide Available:General instructions and checklist
Document Assembly Method:User fills in template blanks
Document Preview/Sample Available:Document preview: Download partial view of document
Help Support Email/Telephone:Limited - not legal advice
Country:US jurisdiction
State:na
MainSiteUrl:www.findlegalforms.com
NZ$19.95

This Offer to Purchase Partnership Interest is for use by one partner of a company to purchase another partner's interests.

Document Delivery Format:Delivery format: Download MS Word or PDF file
Document Source:Complies with US and State law
Document User Guide Available:General instructions and checklist
Document Assembly Method:User fills in template blanks
Document Preview/Sample Available:Document preview: Download partial view of document
Help Support Email/Telephone:Limited - not legal advice
Country:US jurisdiction
State:na
MainSiteUrl:www.findlegalforms.com
NZ$19.95

This Subscription to Limited Partner Units contains two versions of this document and is for use when an individual purchases units in a limited partnership.

Document Delivery Format:Delivery format: Download MS Word or PDF file
Document Source:Complies with US and State law
Document User Guide Available:General instructions and checklist
Document Assembly Method:User fills in template blanks
Document Preview/Sample Available:Document preview: Download partial view of document
Help Support Email/Telephone:Limited - not legal advice
Country:US jurisdiction
State:na
MainSiteUrl:www.findlegalforms.com

United States
Fast & cost effective answers to your unique legal questions
Ask a Lawyer now





United States
Fast & cost effective answers to your unique legal questions
Ask a Lawyer now




Not legal advice Disclaimer

HowToLaw includes links to other websites. These links are provided for your convenience to provide further information and educational purposes only. They do not signify that we endorse the website(s). We have no responsibility for the content of the linked website(s). These links to other websites not controlled by HowToLaw. You should be aware that these sites will have their own privacy policies and that these may differ from our own. Any links on HowToLaw to any document does not constitute legal advice and is not a substitute for legal advice. HowToLaw gives you no legal advice as to the suitability of any document to your specific circumstances nor as to what provisions contained in a document might be suitable to your specific circumstances. The basis on which you view or purchase any document through any website links is that it is suitable to be used only together with legal advice as to how the document should be applied and adapted to your specific circumstances. For legal advice for your specific situation, you should consult a lawyer. HowToLaw is not liable for any loss or damage that results from the use of or reliance on a purchased document or that is caused by you not obtaining legal advice for your specific circumstances, or that results from any action you take with any document that is provided through any links on the HowToLaw site.


  Bookmark this page in your web browserwww.howtolaw.co - US partnership documentsCartNo Items in your Cart