Most partnerships in business will be governed by a partnership agreement. However problems arise when the agreement is of a poor standard and a partnership dispute comes up.
A business partnership is like many romantic partnerships. It starts great, but after a while cracks may begin to form and a business partnership dispute can arise. This is why it is of paramount importance to have a written agreement in place at the point when the partnership is formed. It may seem awkward to suggest a formal agreement, especially if your business partner is a family member or friend. However, in this situation you must put the awkwardness to one side and create a written agreement that covers all the necessary angles. If you don't have any formal written agreement then you'll partnership is governed by the Partnership Act of 1890- and you may find that, being bound by the Partnership Act, you are lumbered with provisions that you wouldn't have chosen yourself.
A written partners agreement is not legally required, but may save a a large amount of hassle if things turn sour between two partners, and a business partnership dispute arises. If you think you may not have covered all the bases, you can seek legal advice from a specialist business law solicitor in preparing your partners agreement. This will make things easier if the partnership falls apart somewhere down the line. Anyone without previous experience of a business partnership is unlikely to know exactly what needs to be included. Some partners agreements can be very complex, in which case it is highly advisable to seek professional advice from someone who can assist you.
Amongst the useful source provisions that you need to include in a written partners agreement are allocation of profit and loss, what happens if a partner dies, conflict resolution, and many more. You would be surprised at how many people overlook some of the most important aspects when agreeing to the terms of a written partnership agreement, but this can cause significant problems in the future.
Some people think that they are totally covered for every eventuality just by the mere fact that they have a written partnership agreement. However, most people in business know that there are many complexities and changes that can arise with a business, meaning that partners may not see eye-to-eye, or one partner wants to leave. It is vital that all of these aspects are covered. Then, if a business partnership dispute arises, a great deal of time and money will be saved because everything has been clearly defined.
Remember the old saying "Fail to prepare, prepare to fail."
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