Overview of Partnership Agreement
What is this document?
A Partnership Agreement governs the relationship between two or more partners in a venture. It establishes the rules of the partnership and governs each party’s responsibilities to the business and to other partners.
When would I use this document?
This document can be used when establishing a business between two or more partners. This document would NOT be used for a Limited Liability Partnership.
Who signs this document?
This document is signed by each of the participating partners.
More details about this document
A Partnership Agreement enables business partners to establish ground rules for the business’ governance and operations. It is prudent to implement a Partnership Agreement regardless of whether a partnership is formed between friends, family members, or with strangers.
Partnership Agreements dictate how a partnership will operate, and more specifically the responsibilities of each partner in terms of contributing capital to the business, division of profits, management decisions, dispute resolution between partners etc.
Partnership Agreements are important because partnerships in Canada are not separate legal entities like a corporation. Individual partners have the capacity to bind the entire organization, including the other partners, and therefore it is important to outline each partner’s authority and responsibilities.
What are the core elements of this document?
The core elements of a Partnership Agreement include: Primary Purpose of Partnership, Capital Contributions, Withdrawal of Capital, Proportionality of Profit & Loss, Management, Decision Making, Contract Binding Authority, Admitting or Removing Partners, Dissolution of Partnership and Partner Voting Rights.
Additional clauses may include: Books of Account, Annual Report, Term of Partnership, Place of Business, Interest on Capital, Fiscal Year End, Frequency of Meetings, Duty to Devote Time, Forbidden Acts and Life Insurance.
Related Documents
Limited Partnership Agreement – a document setting up a specialized partnership with a general partner and limited liability for limited partners
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Rajah Lehal: Rajah is the Founder and CEO of Clausehound.com. Rajah received his M.B.A. and J.D. degrees, from the University of Western Ontario Richard Ivey School of Business and the Faculty of Law respectively, during which time he was Co-President of Entrepreneurs@Ivey, a student-run entrepreneurship group and, as well, assisted Professor Richard McLaren with the launch of the Western Business Law Clinic. Rajah also received an Honours Philosophy degree from the University of Waterloo, where he also took a significant course load in Mathematics and Computer Science. Rajah worked for more than a decade in the information technology industry, including three years in software development and seven years as an Information Systems and Technology manager at both a major telecommunications company and at a financial services company. Rajah also received his legal training in the corporate law group at Stikeman Elliott LLP in Toronto, as well as internationally for the Technology Media and Telecom group in the Dubai office of Clyde & Co. Rajah is a Technology and Small Business Lawyer and is counsel for the Venture Law Practice Group at Cobalt Business Counsel, a corporate and securities law practice based in Toronto. Recently, Rajah has been interviewed for a Financial Post podcast and by the Globe and Mail for his work at Multiplicity, and has joined the Loan Review Committee Member for the CYBF Spin Master Innovation Fund and was asked to judge the Ivey IBK Business Plan Competition. Rajah is also on the board of directors of Sky’s the Limit charity that provides laptops to youths in need and is Canadian Responsible Leaders Chapter Head for the BMW Foundation. Rajah continues to be an active member in the start-up technology industry nationally and internationally.