WHAT IS A PARTNERSHIP AGREEMENT?
In Ontario, there are three types of partnerships: general partnerships, limited partnerships, and limited liability partnerships. A partnership agreement is a legal contract executed by the partners that set out the relationship and roles of the individual partners in a partnership. Common terms of a partnership agreement include details on how profits and losses are to be divided, authority and responsibilities of the partners, decision-making procedures, the capital contribution of the partners, how disputes are to be settled, the stipulation of the term of the partnership, and instances that may lead to the termination of the partnership relationship.
Without a partnership agreement, the partnership will be governed by the relevant statute in the province of Ontario. This may cause issues for the partnership as the terms set out in partnership legislation are uniform and may not address all instances relevant to the partnership. In order to draft a partnership agreement, the partners should discuss how disagreements will be managed, the authority of the partners, how profits and losses are to be shared and the process of adding new partners or removing partners wishing to leave the partnership. While the partnership agreement does not need to be drafted by a lawyer, it is highly recommended to have an experienced business lawyer draft the partnership agreement to ensure it addresses all instances relevant to the partnership.
Our business law team is highly experienced in drafting, reviewing, and negotiating partnership agreements. If you are planning on entering into a partnership agreement, contact us today to set up an initial consultation during which a business lawyer will answer any questions you may have about partnership agreements.
Disclaimer: The information contained in this article is not to be construed as legal advice. The content is drafted and published only for the purpose of providing the public with general information regarding various real estate and business law topics. For legal advice, please contact us.
About the Author:
Shahriar Jahanshahi is the founder and principal lawyer at Jahanshahi Law Firm with a practice focus on representing business star-ups and investors in the province of Ontario. For further information about Shahriar Jahanshahi, click here.