9 Legal Documents required for Business Partnerships
By Alex Tanglao, Last updated: 2021-07-09 (originally published on 2019-02-25)
Partnership business begins when two or more people start a common business with their contribution or investment. As to start a new partnership business you should always focus on the legal side as well. There are certain important documents a partner may need to carry out a healthy business.
Here is the list of documents needed for partnership business
Business Partnership agreementThis is a vital document for a partnership. A business partnership agreement sets out what is expected from each of the partners, how key decisions are made, and how profits (and liabilities) are divided. Legal documents for partnership business should cover who the partners are, their rights and responsibilities, who owns what, and what will happen if and when partners decide to leave the partnership or new ones join.
Why business Partnership agreement?
- Partnership agreement clearly Partners and percentage of ownership.
- Some partnerships are general partnerships, with partners sharing responsibilities and liabilities. Other agreements are limited partnerships, with one or more partners acting as an investor with limited or no activity in the business and little or no liability.
- An effective partnership agreement describe how the business can be dissolved or a partnership transferred.
- Partnership agreements can lay out who owns assets, such as the business name, customer list or recipes, if the business is dissolved
Dissolution of Partnership Deed
Partnerships fail or are dissolved for a variety of reasons. A Dissolution of Partnership Deed helps to properly wind up the partnership and divide any assets or liabilities.
Why dissolution of Partnership Deed?
- A dissolution of partnership agreement contains the terms under which the partnership will terminate.
- A written dissolution of partnership agreement allows partners to address any debts that might survive the partnership, agree on the distribution of remaining assets and address any other remaining issues.
- The agreement can also later serve as evidence that a partner agreed to retire a particular partnership obligation as well as award a partner the right to claim a particular asset, including the right to continue to do business under the auspices of the former partnership.
- A clearly worded dissolution agreement can help avoid misunderstandings. However, if misunderstandings occur, partners may enforce their rights through litigation, filing suit in the proper court within the state where the partnership was created.
When running your business partnership, you may need to share commercially sensitive information. It is important that you preserve the confidentiality with a legally binding agreement, especially when intellectual property is at stake. A Confidentiality Agreement, also known as a Non-disclosure Agreement (NDA), allows you to enter into business relationships without having the risk of information being misused or going to third parties without your consent.
Why Confidentiality Agreement?
- NDA is safeguard for any kind of information that is not widely known.
- Under a nondisclosure agreement, the recipients of the information are required to keep that information private.
- It also makes it illegal for them to pass that information on in any way that would result in the information no longer being a trade secret.
Letter of Intent
Before you enter into a formally binding contract, a Letter of Intent (Memorandum of Understanding) can help to set out the key terms of a potential agreement. A Letter of Intent (Memorandum of Understanding) typically includes details of the proposed agreement, pre-conditions, key obligations, the next steps, and the intended signing date. It can be used as a roadmap for further negotiations and to obtain a final agreement more easily. This document is not legally binding, but it can contain certain legally binding clauses such as confidentiality.
Why Letter of Intent ?
- An LOI may also contain provisions governing confidentiality, due diligence rights and reimbursement of one party’s expenses by the other.
- it identifies “deal breakers” early in the process. Forcing the parties to confirm agreement on important terms early on, even in a nonbinding document, sometimes reveals that no agreement is in fact possible – that a certain right or obligation that one party demands is unacceptable to the other.
- An LOI creates a clear path to closing. A well-drafted LOI will identify each definitive agreement that will be signed at closing and assign drafting responsibility for it.
As your business expands, you will need to hire people. An Employment Contract sets out the obligations and expectations of both the partnership and the employee right from the beginning. Employment contract has big importance for healthy work flow in company. An Employment Contract should cover key areas such as probation period, pay, benefits, hours, annual leave, and termination. It will help to minimise disputes and ensure a happy working environment.
Note: Employment Contract is important for both legal documents for business or partnership business.
Why Employment Contract?
- Most employment contracts set a definite term of employment. This guarantees employees a job as long as they do not violate the terms of the contract, and allows employers to dismiss an employee at the end of the term in jurisdictions that restrict the ability of employers to fire employees.
- A good employment contract will specify exactly what offenses can result in termination of the employee.
- The duties of both the employer and the employee should be clearly spelled out in the employment contract
- A good employment contract will specify dispute resolution procedures that minimize the time and expense of a courtroom battle that neither party can afford.
Sale of Goods Agreement or Supply of Services Agreement
A legal agreement for the sale of goods or supply of services helps to make your customers aware of their rights and obligations from the moment you start doing business with them.
If you are selling goods, you will need a Sale of Goods Agreement. It typically covers the description of what is to be bought, the price, delivery and returns, and how the contract can be terminated.
Use a Supply of Services Agreement if your partnership provides services to another business or individual. This agreement describes scope and nature of the services provided as well as the service levels, the fees to be paid, the timescale, and how to change or terminate the agreement.
- It governs the relationship between end-users and the subject website operator in connection with the website and its various offerings.
- Website Terms and Conditions are essential in, among other things, establishing the ownership rights of the website operator in and to the applicable content and offerings featured on the website, limiting the liability of the website operator in connection with the website and its content/offerings, establishing payment terms (if any) and setting forth the terms for dispute resolution.
- Terms and Conditions address many of the other contingencies that can arise pursuant to the underlying commercial relationship.
- It provides any special information or functions that your website has. If your website has special conditions for collecting information from children (under 16 etc), you should state them clearly in this section.
- Visitors have a right to know what information you are collecting. It may be obvious that you are collecting personal details by asking them to complete a form, but you should make it clear.
- This details the methods you use to collect the information. Is it all automated? Do the forms visitors fill in collect other information, such as the original referrer? All of these questions will help you build a detailed description of how you collect information.
- Its important to be as transparent as possible, and allow users to contact you if they have a query. You should feature both an email address (or online form), as well as a real world address where a user can write to.
There are several legal documents that you might need as a business partnership. With Zegal, you can get access to all the documents you need. Creating documents is fast, easy, and affordable.
- Partnership Agreement
- Dissolution of Partnership Deed
- Sale of Goods Agreement
- Employment Contract
- Supply of Services Agreement
- Memorandum of Understanding (MOU)
- Confidentiality Agreement