I'm trying to write a partnership contract but not sure if it sounds ok....Please let me know if I should change anything.
This Agreement is made between Tim (“Couch”) and Bert (“Parker”) on February 1, 2011. Couch and Parker are sometimes referred to individually as “Partner” and collectively as “Partners.” The Partners desire to form a general partnership. Except as this Agreement provides otherwise, the Uniform Partnership Act will govern the Partners.
1. Name. The Partnership name shall be Can Do
2. Term. The Partnership’s term shall be five years unless terminated sooner as provided in Paragraph 8 below.
3. Purpose and Powers.
3. 1 Purpose. The Partnership’s purpose shall be to:
3. 2 Powers. The Partnership shall have the following powers: 1) to conduct and operate the Partnership business; 2) to execute necessary business documents including notes, leases, service contracts, etc; 3) to open bank accounts and pay business expenses; and 4) to do all other things necessary to carry on their business.
4. Percentage Interest, Capital Contributions, Allocation of Income and Losses.
4. 1 Percentage Interests. The Partners shall have the Percentage Interest in the Partnership as set forth opposite each Partner’s name below:
Partner Percentage Interest
Tim 50 %
Bert 50 %
4. 2 Initial Capital Contributions. The Partners shall contribute to the Partnership the following property:
(a) Bert shall contribute to the Partnership the sum of $16,000 in cash and that amount credited to his Capital Account.
(b) Tim shall contribute to the Partnership the sum of $8,000 in cash and that amount credited to his Capital Account.
(c) Tim is a horse trainer and shall also contribute for one year from the date hereof for Can Do at 1/3 of his usual salary of $24,000 ($8,000) and will make the initial capital contributions of the two partners equal after one year. After the first year, the partnership will negotiate an employment contract with Tim.
4. 3 On-going Capital Contributions. Each party will contribute $3,000 to the partnership at the beginning of every quarter to cover rent and other partnership expenses.
4. 4 Failure of Partner to Make Required Contributions. If a Partner fails to make a required contribution, the other Partner may: a) declare the non-contributing Partner in default; or b) contribute the amount owing and treat the payment as a prime rate demand loan to the noncontributing Partner.
4. 5 Allocation of Income and Losses. Partnership income and losses shall be distributed quarterly to the Partners in proportion to their Percentage Interests.
5. Management and Accounting
5. 1 Management. All Partnership decisions must be unanimous.
5. 2 Accounting. The fiscal year will be a calendar year. Any Partner may inspect the Partnership books and records at any time. Each Partner shall have a capital account that shall be increased by any contributions made by that Partner, and his share of net income from the Partnership, and decreased by his share of net losses of the Partnership.
6. Transfers.
6. 1 Transfer Prohibited. Without prior written consent of all Partners, a Partner may not directly or indirectly sell, pledge or otherwise transfer or encumber his share in the Partnership except as provided below.
6. 2 Right of First Refusal. If a Partner receives an outside offer to buy his interest in the Partnership and wishes to sell, the selling Partner must first offer the Partnership interest for sale, at the same price and other terms in the offer, to the other Partner. The other Partner shall then have 30 days to purchase the selling Partner’s interest. If the other Partner fails to do so, the selling Party may then sell to the outside Party at the price and other terms described in the offer.
6. 3 Deadlock Buy-Sell. If the partners are deadlocked over a decision, Tim can require that Bert purchase Tim’s share of the partnership at 100% of their fair market value as determined by a randomly chosen MAI appraiser.
6. 4 Payment Terms for Deadlock Buy-Sell. Closing within 45 days of Tim’s request for purchase of his interest; 25% of the sales amount to be paid at closing. The remainder will be paid in four equal installments, the first due (3) months after closing, and the rest every (3) months thereafter, with interest at 8%.
6. 5 Purchase of Defaulting Partner's Interest (See below). If a Partner defaults as defined in Paragraph 7 below, the non-defaulting Partner may purchase the defaulting Partner’s interest in the Partnership.
7. Default.
7.1 Default Events. A Partner shall be in default if: (a) the Partner makes an assignment for the benefit of creditors, starts or is forced into bankruptcy, reorganization or insolvency proceedings; (b) the Partner’s Partnership interest is subject to attachment or seizure; and (c) the Partner fails to contributed capital when required or commits any other material breach of this Agreement and fails to cure the breach after 60 days written notice.
7.2 Default Payment Terms. Price paid will be fair market value as determined by a MAI appraiser, less a 10% penalty for the default. All other purchase terms will be as described in the paragraphs on Deadlock Buy-Sell above.
8. Termination.
Even if the term of the Partnership has not expired, the Partnership may terminate by: (a) Unanimous agreement of the Partners; or (b) Sale, or (c) Death or (d) Election of a Partner when another Partner has breached this agreement.
9. Dispute Resolution.
9.1 In the absence of a buy-sell solution to a deadlock or other dispute arising between the partners, the president of the Last Lap Racing Association will act as arbitrator. If the president of Last Lap is unwilling or refuses to serve as arbitrator, each side can choose an arbitrator and these two arbitrators together will pick a third arbitrator who will decide the dispute.
10. General Provisions.
10. 1 Notices. All notices this Agreement requires must be sent to the most recent Partner’s address as recorded in the Partnership books.
10. 2 Paragraph Headings. Paragraph headings are for convenience only and are not a part of this Agreement.
10. 3 Costs of Action. In any dispute concerning this agreement, the prevailing Partner will be entitled to reimbursement of costs and attorneys fees.
Signed by:
Tim Couch Date: ________________________________
Bert Parker Date: ________________________________
I would not change any of it .It sounds good.
The partnership contract you have written seems to cover all the essential elements of a partnership agreement. However, there are a few suggestions and considerations you may want to take into account:
1. Clear Definitions: The document starts with the names of the partners, but it might be helpful to provide more information about each partner, such as their addresses, contact details, and roles within the partnership.
2. Legal Requirements: It is important to consult with a lawyer or legal advisor to ensure that your partnership agreement adheres to the laws and regulations of your jurisdiction. They can provide guidance specific to your situation and ensure the agreement is legally enforceable.
3. Duration of the Partnership: The stated term of five years is mentioned, but it does not explain what happens after the term expires. You may want to include provisions for renewal or termination, along with the process for making such decisions.
4. Purpose and Powers: The purpose of the partnership is mentioned briefly, but it could be more specific and comprehensive. Consider including a detailed description of the business activities and objectives of the partnership. The powers of the partnership listed in section 3.2 are well-defined and cover the basic requirements.
5. Capital Contributions: The capital contributions section seems to be well-detailed and covers the initial and ongoing contributions. However, you may want to specify the consequences if a partner fails to make their required contribution, such as the options available to the other partner(s) or the potential impact on their ownership percentage.
6. Management and Decision-Making: The agreement states that all partnership decisions must be unanimous, which can lead to potential difficulties in certain situations. Consider adding provisions for alternative decision-making mechanisms in case of disagreements or deadlocks.
7. Transfers and Buy-Sell Agreements: The provisions related to transfers and buy-sell agreements are well-defined. However, you may want to add details about the process for valuing the partnership interest or establishing the fair market value in case of a transfer.
8. Default and Termination: The default and termination sections are clearly outlined, but it may be useful to include provisions for the resolution of disputes before a partnership is terminated.
9. Dispute Resolution: The dispute resolution provision is included, but you may want to specify the rules or guidelines for the arbitration process, such as the selection of arbitrators, their qualifications, and the procedures to be followed.
10. Notice and Communication: Consider including provisions for effective communication between partners, specifying the preferred methods of communication and how notices will be delivered.
Remember, it is always recommended to seek professional legal advice to ensure your partnership agreement is tailored to your specific needs and complies with the relevant laws and regulations.