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This section identifies the legal entities or individuals entering into the contract and establishes their formal residency for legal notice.
This section outlines the operational identity of the business, including its legal name, primary purpose, and governing jurisdiction. It sets the foundational "who, what, and where" that dictates how the business will function and which provincial laws will apply to its activities.
This section details the specific assets, whether cash or property, that each partner is committing to the venture at the start date.
PARTNERSHIP AGREEMENT
Between
______ of ______
and
______ of ______
(Together, the "Partners" and individually, a "Partner")
1. Establishment of the Partnership
The Partners hereby form a general partnership (the "Partnership") pursuant to the laws of ______.
Unless this Agreement provides otherwise, the ______ partnership legislation and all other relevant statutes apply.
2. Essential Details
Item | Detail |
Name of Partnership | ______ |
Business Purpose | ______ |
Start Date | ______ (continues until ended under this Agreement) |
Main Address | ______ (other locations may be added by mutual consent) |
3. Capital Contributions
a. Initial Capital Contribution
Partner | Description | Agreed Value |
______ | ______ | ______ |
______ | ______ | ______ |
Each Partner shall deliver the contribution described above in full no later than ______.
b. Additional Capital Contributions
No Partner is required to add more capital.
If extra funds are needed, any Partner may contribute in proportion to their existing share.
If a Partner cannot or will not contribute within a reasonable time, the other Partners may cover the shortfall in the same proportion.
Any amount advanced beyond a Partner's agreed contribution constitutes a loan to the Partnership, repayable with interest at a rate determined by majority vote of the Partners. Such a loan does not enlarge the lending Partner's share of profits or voting power.
c. Withdrawal of Capital
No Partner may withdraw capital without the written agreement of every other Partner.
d. Capital Accounts
The Partnership shall maintain an individual capital account for each Partner recording all contributions made.
4. Profits, Losses, and Financial Administration
1. Decisions -- Matters of distributions, further capital requirements, and other financial questions require unanimous consent except where this Agreement specifies otherwise.
2. Allocation of Profit and Loss -- Net profits and net losses shall be divided among the Partners in proportion to each Partner's aggregate capital contribution.
3. Books and Records -- The Partnership shall maintain complete books prepared in accordance with GAAP, available for inspection by any Partner during normal business hours.
4. Annual Report -- Following the close of each fiscal year, the Partnership shall provide every Partner with:
A summary of the financial results suitable for tax filings;
A copy of the filed federal tax return;
and Any other information a Partner reasonably requests.
5. Banking -- All Partnership funds shall be held in accounts in the Partnership's name; co-mingling with personal or unrelated business funds is prohibited.
6. Audit Rights -- Any Partner may request one independent audit per fiscal year at Partnership expense, to be conducted by a firm approved unanimously by the Partners.
7. Fiscal Year End -- December 31 (unless the Partners unanimously select a different date).
5. Management and Authority
Binding Authority – Any Partner may bind the Partnership on matters in the ordinary course of business.
Operational Decisions – Day-to-day control, major contracts, and other management matters require unanimous approval unless this Agreement states otherwise.
Meetings – Regular meetings will be held as needed. Any Partner may call a special meeting with reasonable notice; the meeting will cover only the stated business.
Voting – Each Partner has one vote of equal weight unless the Partners unanimously agree to weight votes by capital share.
6. Changes in Partnership Membership
Admitting a New Partner – Requires unanimous written consent. The new Partner must sign this Agreement.
Voluntary Withdrawal – A Partner may leave by giving at least three (3) months’ written notice; this dissolves the Partnership.
Involuntary Withdrawal – A Partner is deemed withdrawn (and the Partnership dissolves) upon incapacity, death, prolonged disability, breach of duty, criminal conviction, expulsion, operation of law, or conduct damaging to the business.
Dissociation and Dissolution – If the Partnership dissolves, it will be wound up promptly. Debts are paid first, then Partner loans, then remaining assets are distributed in proportion to capital contributions.
7. Valuation Upon Exit or Dissolution
Asset Distribution Order
Pay third-party creditors.
Repay Partner loans.
Distribute remaining assets by capital share (“Dissolution Distribution”).
Fair Market Value – If needed, an independent accountant (chosen unanimously) will value the Partnership under GAAP. Goodwill is included only if already on the books.
A withdrawing Partner receives their share of the Dissolution Distribution, minus any liabilities.
8. Duties and Restrictions
Duty of Loyalty – No Partner may run a competing business or create a conflict of interest without unanimous written consent.
Duty of Accountability – Any profit made from using Partnership property or name without consent must be paid to the Partnership.
Duty of Care and Time – Each Partner must devote reasonable time and attention as decided by the majority of Partners.
Forbidden Acts – No Partner may:
Assign Partnership authority to non-Partners;
Break this Agreement;
Make the business unviable;
Bind the Partnership outside its scope; or
Consent to a judgment against the Partnership.
Violation may lead to involuntary withdrawal.
9. Liability and Insurance
Limited Personal Liability – A Partner is not personally liable for acts done in good faith within their authority.
Indemnification – The Partnership will indemnify Partners acting in good faith, except for wilful misconduct, gross negligence, or breach of this Agreement.
Insurance – The Partnership may buy liability insurance for its Partners and employees, and life insurance on any Partner if the Partners agree.
10. Amendments
This Agreement may only be modified by the unanimous written consent of all Partners.
11. Governing Law
This Agreement shall be governed by and construed under the laws of ______. Any dispute arising hereunder shall be resolved exclusively in the courts of ______.
12. Definitions
For the avoidance of doubt, the following terms carry the meanings assigned in the full version of this Agreement: "Capital Contribution," "Additional Capital Contributions," "Initial Capital Contribution," "Dissociated Partner," "Expulsion of a Partner," and "Operation of Law."
13. Miscellaneous
Counterparts – This Agreement may be signed in counterparts, together forming one document.
Time of the Essence – All deadlines matter.
Headings – Headings are for convenience only.
Severability – If a court invalidates a clause, the rest stays in force.
Entire Agreement – This document is the whole agreement among the Partners.
Binding Effect – The Agreement binds and benefits the Partners and their legal successors.
Notices – A notice is effective when delivered by hand/agent or seven (7) days after mailing with prepaid postage to a Partner’s last known address.
Cumulative Remedies – Rights and remedies here are in addition to those at law.
IN WITNESS WHEREOF the Partners have executed this Agreement on the dates indicated below.