Partnership Agreement

Your Partnership Agreement is an agreement between you and your partner(s) that sets out the duties and obligations of the partners to each other and to the partnership.

You do not need to file your Partnership Agreement. Your Partnership Agreement is simply an agreement between the partners.

Select the province in which the partnership will primarily do business. The laws of the province you select will be used to develop this agreement.

You should choose a business name that is different from any other existing business.

Most partnerships come to an end by an eventual decision of the partners or some other intervening event. A fixed term instead sets an end date for the partnership in advance to suit specific circumstances.

A partner can be a person (individual), a corporation, an LLC, or another partnership (business entity).

Capital contributions could include cash, resources, or services. Provide an accurate description including quantities and amounts.

All partners are important to your partnership. The Partnership Agreement should include terms and conditions that protect your partnership from the unexpected withdrawal of a partner.

On dissolution of your partnership, the affairs of the partnership must be wound up, assets liquidated, debts paid, and the surplus divided equally among your partners. If there is only one partner left after a withdrawal, then your partnership must dissolve.

Partners and managers are presumed to have had access to confidential partnership information. After a partner or manager withdraws from the partnership, the partner or manager should be prevented from using that confidential information to compete directly with your partnership.

You have indicated that there are two partners and that no new partners may be admitted. Therefore if one partner leaves the partnership will dissolve automatically.

The fiscal year is the accounting period for which annual financial statements are prepared.

Each of your partners will need a copy of the federal income tax report in order to calculate their own personal income tax.

A managing partner will have an ownership interest in your partnership and is also responsible for overall management and day-to-day operations of the partnership.

* Some business decisions can substantially change the nature of your business, sometimes bringing unanticipated risk to your minority partners.
* If applicable to your situation, protections for your minority partners can be included in your Partnership Agreement by requiring a unanimous vote on important decisions.
* Keep in mind that requiring unanimous consent also means that each of your partners can veto any decision.

* Any partner is presumed to have the authority to enter into a contract on behalf of your partnership, where the subject of the contract appears reasonable, given the usual business activities of the partnership. In some circumstances it may be appropriate to restrict contract signing authority to a smaller number of individuals.
* Any variation to the presumed authority of the partners must be communicated to 3rd parties, vendors, and business associates.

Some types of business decisions involve significant new risk. To protect the interests of all partners, some of your business decisions should require the consent of all partners.

Sometimes it becomes apparent that money owed to your partnership will never be collected in full. But, a waiver or release of any significant debt owed to your partnership should be agreed to by all partners.

* Do not use several names or words to refer to the same person or thing as it could cause confusion and ambiguity by appearing to introduce new or different people or items.
* Certain words were capitalized and defined already in this Agreement. For example, a partner is called the Partner. Use the same predefined terms in your additional clauses.
* Do not use pronouns such as: they, us, we, our, you, or me. Pronouns may be ambiguous and can cause confusion. e.g.:

• Wrong: If a Partner's ownership interest becomes available for sale, we have a right to first purchase.
• Right: If a Partner's ownership interest becomes available for sale, the remaining Partners have a right to first purchase.

* It is not required that you have someone witness the signing of your Partnership Agreement for it to be legally valid. But it is still a good idea if the execution of your agreement is ever challenged.
* A witness should be a neutral third party who has no personal or business relationship with you or any of your partners.