This is a document for a partnership agreement, where a sole proprietor is taking on a business partner.
It is fairly common for a sole proprietor who has developed a business to take on a partner for succession planning purposes, or to grow the business further. It is important in these circumstances to record the business relationship of the parties going forward including:
· the value of the business at the commencement of the partnership;
· the contribution to be made both monetarily and operationally by the party joining the business; and
· the way in which the parties will work together going forward
This is particularly important, given that the sole proprietor will be unused to a partner sharing responsibility for, and having a say in, the business.
It is also common for partnerships with 2 or 3 founding partners, who have not entered into a written partnership agreement initially, to decide to record the partnership arrangements in writing once an additional partner is brought into the partnership business.
Using this precedent
This agreement takes into account the scenario where a sole proprietor invites another person to enter into a partnership agreement in relation to an existing business. However, it can be adapted for the purposes of parties to a partnership taking on a new partner.
· be familiar with the relevant state or territory partnership act which is applicable to a specific partnership, as each state and territory in Australia has a separate partnership act, the contents of which are very similar to each other; and
understand the relationship between the short and long term strategic objectives of the partners.
This document has been authored for LexisNexis by Michael Heraghty, Partner, TressCox Lawyers, Rosemarie Ryan, Barrister and Elise Margow, Principal, Legally Speaking
This document is prepared with the assistance of Specialist Editor Stephen Newman, Executive Counsel, Ponte Earle.