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This Partnership Agreement is a legally binding document that establishes a partnership between Party 1 and Party 2. The agreement outlines the purpose of the partnership, which is to conduct business in a specific territory under the name of Name. The partners wish to regulate their relationship and the management of the partnership in accordance with the terms of this agreement.
The agreement begins with an interpretation section, which provides definitions for various terms used throughout the document. These definitions include accounting period, affiliate, accounts, auditors, budget, business day, business plan, director, effective date, executive manager, partners, partnership board, partnership interest, partnership, percentage share, P1's capital account, P2's capital account, P1 director, and P2 director.
The clauses and headings section clarifies that the headings used in the agreement are for convenience only and do not affect the interpretation of the document. The section on statutes, orders, and regulations states that any reference to a statute, order, or regulation includes references to any amendments, replacements, supplements, or re-enactments of that statute, order, or regulation.
The agreement then covers various aspects of the partnership, including the commencement, business of the partnership, partnership capital, further finance, profits and losses, directors and partnership board, executive management, partnership property, undertakings by partners, expenses, accounts, budgets and information, claims by partner, default, assignments, confidentiality and announcements, termination and deadlock, waivers and amendments, severability, entire agreement, notices, English language, settlement of disputes, governing law, counterparts, and no rights for third parties.
The termination and deadlock section explains that if a fundamental deadlock or difference arises between the partners, they will make efforts to resolve the matter amicably. If they are unable to do so, the dispute will be referred to the respective chairpersons or chief executives of the parties. The governing law section states that the agreement is governed by the laws of the territory applicable therein, and any disputes will be subject to the exclusive jurisdiction of the courts of the territory.
The agreement concludes with a section on counterparts, which states that the agreement may be executed in any number of counterparts, and a section stating that no rights are granted to third parties under this agreement.
Overall, this Partnership Agreement is a comprehensive document that covers all aspects of the partnership between Party 1 and Party 2, providing clear definitions, guidelines, and procedures for the management and operation of the partnership.
1. Establish the partnership: Enter the names and addresses of Party 1 and Party 2 in the agreement, clearly identifying both parties.
2. Define the purpose of the partnership: Specify the territory in which the partnership will operate and the name under which it will conduct business. This ensures clarity and establishes the scope of the partnership.
3. Determine capital contributions: Both parties should make initial contributions to the partnership's capital. Specify the amount of capital each party will contribute and credit their respective capital accounts accordingly.
4. Agree on further finance: Each partner is responsible for contributing their percentage share of any additional funding required by the partnership. These contributions should be treated as capital contributions and credited to the respective capital accounts.
5. Allocate profits and losses: Determine how profits and losses will be allocated among the partners. By default, they will be allocated in proportion to the partners' percentage shares, unless otherwise agreed.
6. Establish the partnership board: Create a partnership board responsible for the overall supervision of the business. The board should consist of non-executive directors appointed by each party.
7. Delegate executive management: Delegate day-to-day executive management of the business to the chief executive, who will be assisted by other executive managers. The chief executive's responsibilities should align with the business plan and budget approved by the partnership board.
8. Define partnership property: Clarify that partnership property is beneficially owned by the partners in proportion to their percentage shares. Any property held by one partner on behalf of the partnership should be held in trust.
9. Undertakings by partners: Both partners should undertake to promote the best interests of the partnership, consult on important matters, and act in good faith towards each other.
10. Handle expenses: Establish procedures for reimbursing partners for costs and expenses incurred in the performance of their partnership obligations.
11. Maintain proper accounts: The partnership board is responsible for maintaining accurate accounting records and arranging for the preparation of audited accounts, including a balance sheet, profit and loss account, and statement of source and application of funds.
12. Prepare budgets and provide information: The chief executive should produce a draft budget and updated business plan for each accounting period. Management accounts and other relevant information should be prepared and shared with the partnership board and partners as required.
13. Handle claims by partners: If a partner has a claim against another partner, they should ensure that their nominated directors do not hinder the assertion or enforcement of the claim. However, the defendant party retains the right to dispute the claim.
14. Address default situations: Specify events of default and the consequences that may arise, such as the right to serve a purchase notice requiring the defaulting partner to sell their partnership interest.
15. Allow for assignments: Establish rules for transferring or assigning partnership interests, including restrictions on transfers for an initial period and the right of first refusal for the other partner.
16. Maintain confidentiality: Both partners should keep confidential any commercial or technical information acquired in relation to the partnership or the other partner's business, except as required by law or for advancing the business.
17. Terminate the agreement: Provide for termination of the partnership in the event of a fundamental deadlock, financial underperformance, or mutual agreement. Establish procedures for winding up the business and distributing assets.
18. Amend the agreement: Specify that any amendments or variations to the agreement must be in writing and signed by authorized representatives of both parties.
19. Ensure severability: Include a provision stating that if any provision of the agreement is invalid or unenforceable, it will not affect the validity of the remaining provisions.
20. Confirm entire agreement: Clarify that the agreement represents the entire understanding between the parties and supersedes any prior representations or agreements.
21. Provide notice provisions: Establish rules for giving notice under the agreement, including methods of delivery and addresses for each party.
22. Specify governing law and jurisdiction: Determine the governing law and jurisdiction for any disputes arising from the agreement.
23. Allow for counterparts: State that the agreement may be executed in multiple counterparts, with each counterpart constituting an original document.
24. Exclude rights for third parties: Clarify that the agreement does not grant any rights to third parties to enforce its terms.
25. Encourage amicable settlement: Encourage the parties to resolve any disputes amicably before resorting to formal dispute resolution mechanisms.
Please note that this guidance provides a summary of the key points in the Partnership Agreement. It is important to review the full agreement and seek legal advice to ensure compliance with applicable laws and regulations.