Beginning a business partnership is an exciting venture for many entrepreneurs. This kind of engagement results in the expansion of a business and proper distribution of workload. But before entering a business partnership, you should iron out all the relevant details to prevent obstacles or conflicts. This can be done by drafting a business agreement.
To ensure that the partners are in agreement, some clauses or even the whole business agreement may have to be drafted by professional commercial lawyers. The drafting of a business agreement involves a number of steps:
• The agreement should have the names of all the partners and should also specify the type of partnership.
• A section of the document should specify the value of each partner's total assets at the time of the partnership creation. This is an essential component of limited liability partnerships and corporations because it states the maximum amount that each partner may get in court in case of dissolution.
• The roles of each partner should be clearly stated in the partnership agreement. If there are certain partners who may not participate in the daily running of the business, they are silent partners and should be added as so to protect them from liability to be placed on the active partners.
• All prospective partners should meet prior to the creation or signing of the agreement. They should plan to engage in discussions that cover the different points of the agreement.
• Some of the areas that should be clear in the agreement are how profits are going to be split, the contribution of each partner in management, the procedures a partner should follow in case they want to leave the partnership, the distribution of assets in case of dissolution and the procedures for buying out, expelling or adding new partners.
• Points should be written down once an agreement has been reached.
• The document should be made legally binding by hiring business lawyers to draw up the agreement's final draft.
• The final draft should be signed by all partners and copies distributed to all the partners.
In Australia, a business can only be classified as a partnership if it has the following characteristics:
• There is a valid agreement between parties
• The parties show an intention of undertaking a commercial venture together
• The rights, obligations, agencies and interests between parties are common
• They are formed with a view to make a profit
John Greyson is one of the most knowledgeable guys in town, he knows everything you need to learn about business. Stay tuned for more of his cool business tips and advices about Commercial Lawyers by visiting http://www.mmlaw.com.au/718-118/.aspx .
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