A partnership contract is a legal document which is entered between two or more than two individuals or organisation when they wish to enter into a partnership agreement. These types of contracts can be drafted for various different types of partnerships and depending on this the terms and conditions are also framed. A partnership contract helps various parties to put down various terms and conditions of working so that there is dispute later on. In case of any dispute among the partners, these contracts act as written evidence.
Points to be considered while preparing a partnership contract:
- The name of the business organisation, and the working office details should be included in the partnership contract.
- While entering in a partnership contract, the duration for which contract is signed and the termination clause should be included.
- One of the mandatory points is that capital used for establishing the business should be mentioned in the contract. Also specify the contributor of the capital along with the amount contributed.
- This contract should also include the ratio of division of profits and losses between the partners. The salary and withdrawal specifications should stand out clearly in the contract.
- The division of duties of both the partners should be included within the contract and the legal actions which can be taken, in case one is found not to be performing his or her share of duties.
- One of the important segments of such contracts is that, which issues can lead to the dissolving of partnership and then how would the capital and infrastructure be divided between the partners.
- The effective date from which the partnership contract would come into force is also to be mentioned which would be considered as the date of initiation of new business activities. Finally in the end, the signatures of both the parties should be included.