DIY Legal Forms

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Partnership Agreement

1. Introduction. Agreement to form a partnership (Partnership) made on [date], between [name], residing at [address], and [name], residing at [address].

2. Partnership Purpose and Name. The parties agree to form Partnership on the terms set out below to engage in the business of [nature of business]. Partnership's name shall be [name], and its principal office shall be at [address].

3. Duration of Partnership. Partnership will begin on [date] and will continue until it terminates in accordance with the provisions of this Agreement.

[Alternative Paragraph]

3. Duration of Partnership. Partnership will begin on [date] and end on [date].

4. Partners' Capital Contributions. The Partnership capital shall be contributed by the Partners, partly in cash and partly in personal property. The cash contributions shall be:

[schedule of Partners' names and cash amounts]

The contributions of personal property and the values to be placed upon them shall be:

[schedule of Partners' names, descriptions of property, and values of property]

5. Partners' Capital Accounts. Partnership shall maintain a separate capital account for each Partner. Neither Partner may withdraw any part of the Partner's contributed capital without the other's consent. If a Partner's capital account falls below the amount of the Partner's contributed capital because of losses or permitted withdrawals, the Partner's share of profits will be credited to the Partner's capital account until the capital contribution has been restored, and before any profits can be credited to the Partner's income account.

6. Division of Profits and Losses. The net profits and losses of Partnership will be equally divided between the Partners.

[Alternative Paragraph A]

6. Division of Profits and Losses. The net profits and losses of Partnership will be divided in accordance with the proportion that the amount of each Partner's contributed capital bears to Partnership's total contributed capital.

[Alternative Paragraph B]

6. Division of Profits and Losses. The net profits and losses of Partnership will be divided or charged to the Partners in the following proportions:

[schedule of Partners' names and percentages of profit or loss allotted]

7. Partners' Income Accounts. Partnership shall maintain a separate income account for each Partner to which each Partner's share of Partnership's income or losses shall be credited or charged. If there is no credit balance in a Partner's income account, losses shall be charged to the Partner's capital account.

8. Partners' Right to Salary and Drawings. Neither Partner shall receive any salary for the Partner's services to Partnership. Each Partner may withdraw any credit balance in the Partner's income account at any time. Neither Partner shall be entitled to an additional share of profits solely because the Partner's capital account exceeds that of the other, except as otherwise provided in this Agreement.

[Alternative Paragraph]

8. Partner's Right to Salary and Drawings. Partner [name] shall draw a salary of ........ dollars ($........) weekly, and Partner [name] shall draw a salary of ........ dollars ($........) weekly. The Partners' salaries shall not be charged to their capital or income accounts but shall be charges for the purposes of determining Partnership's net income. Withdrawals of credit balances from the Partners' income accounts shall be made only at the times and in the amounts that the Partners agree upon from time to time.

9. No Interest on Capital. No interest will be paid on any balances in the Partners' capital accounts.

10. Management of the Partnership. Each Partner shall have an equal voice in the management of Partnership, and each shall be devoted full time to the conduct of its business. Without the other's written consent, no Partner shall, on Partnership's behalf:

a. Borrow or lend money;

b. Make, deliver, or accept commercial paper;

c. Execute any mortgage, security agreement, bond, or lease; or

d. Buy or execute a purchase agreement, or sell or execute a sales agreement for any property other than that bought or sold in the regular course of Partnership's business.

11. No Sale of, Assignment of, or Granting Lien on Partnership Interest. Without the other's written consent, no Partner shall:

a. Assign, mortgage, give a security interest in, or sell the Partner's Partnership interest;

b. Agree with a party not privy to this Agreement that such party will have an interest in Partnership; or

c. Do anything that would be detrimental to Partnership's ability to conduct its business.

12. Partnership Bank Account. All Partnership funds shall be deposited in its name in an account with the [name of bank] located at [address], or such other bank or banks as the Partners may agree upon from time to time. All withdrawals from these accounts shall be by check signed by either Partner.

13. Partnership Books and Records. Partnership books of account will be kept in accordance with generally accepted accounting principles. The books and supporting records will be maintained at Partnership's principal office and will be examined by Partnership's certified public accountants at least [frequency]. Partnership's fiscal year shall start on [month and day] and close on [month and day]. Partnership's certified public accountants shall prepare an income statement and balance sheet for each fiscal year within [number] months after the end of the fiscal year. These financial statements shall be binding upon the Partners as to income or losses and the balances in the Partners' income and capital accounts.

14. Voluntary Dissolution of Partnership. The Partners may agree to dissolve Partnership at any time. Should the Partners so agree, they will liquidate Partnership in an orderly fashion. The proceeds derived from the sale of Partnership's property, including its name and goodwill, shall be applied in the following order:

a. Discharge all Partnership liabilities and pay the costs of liquidation;

b. Bring the Partners' income accounts into balance;

c. Pay the balance shown in each Partner's income account to that Partner;

d. Bring the Partners' capital accounts into balance; and

e. Pay the balance shown in each Partner's capital account to that Partner.

15. Effect of Partner's Retirement. A Partner may retire from Partnership at the end of any Partnership fiscal year by serving written notice of his intention to retire upon the other Partner no later than [number] months before the end of the fiscal year. The remaining Partner may elect either to purchase the retiring Partner's interest or to terminate and liquidate Partnership together with the retiring Partner. Written notice of the remaining Partner's election shall be served on the retiring Partner no later than [number] months after receipt of the notice of intention to retire.

If the remaining Partner elects to purchase the retiring Partner's interest, the purchase price and terms of payment shall be those set out in Paragraph 17.

If the remaining Partner elects to terminate and liquidate Partnership together with the retiring Partner, the termination and liquidation shall be carried out in the manner described in Paragraph 14.

16. Effect of Partner's Death. If one of the Partners dies, the survivor may either purchase the deceased Partner's interest or terminate and liquidate Partnership.

17. Election to Purchase the Deceased Partner's Interest in the Partnership.

a. Notice of Election. If the surviving Partner elects to purchase the deceased Partner's interest, the Partner shall serve written notice of this election within [number] months after the Partner's death upon the executor or administrator of the decedent if one has been appointed and qualified or, if none has qualified, upon the decedent's heirs at their last known addresses.

b. Purchase Price. The purchase price will be an amount equal to the balance in the decedent's capital account as of the date of the decedent's death, plus or minus the balance in the decedent's income account at the end of the fiscal year immediately preceding the Partner's death, increased or decreased by the decedent's share of Partnership profits or losses for the period beginning with the start of the fiscal year in which the Partner died and ending the last day of the month in which death occurred, reduced by any withdrawals from the deceased Partner's income account during the same period. The purchase price will not include any separate amounts for goodwill, trade name, patents, or other intangible assets. The surviving Partner will be entitled to use Partnership trade name. The purchase price will be paid without interest in [number] equal monthly payments commencing [number] months after the month in which the decedent died.

[Alternative Paragraph]

b. Purchase Price. The purchase price will be an amount equal to the balance in the deceased Partner's capital account together with a sum equal to [number] times the average net income earned by Partnership in the [number] fiscal years immediately prior to the deceased Partner's death. If the deceased Partner's death occurs in the last six months of any fiscal year, that fiscal year shall be one of the [number] fiscal years included for the computation of average net income. The determination by Partnership's certified public accountants of Partnership's average net income shall be conclusive upon all parties.

18. Election to Liquidate Partnership. If the surviving Partner elects to liquidate Partnership, the liquidation will proceed as quickly as possible, following the procedure described in Paragraph 14 of this Agreement. In addition to its share of the proceeds from the liquidation, the deceased Partner's estate shall be entitled to any profits that have not been withdrawn and that have been earned up to and including the date of the deceased Partner's death. If there have been losses up to and including the date of the deceased Partner's death that have not been charged to the Partner's income account, they shall be so charged before any distribution is made to the deceased Partner's estate.

19. Arbitration of Disputes. Any controversy concerning this Agreement will be settled by arbitration according to the rules of the American Arbitration Association, and judgment upon the award may be entered and enforced in any court.

[signatures]

Partners

This Section for Notary:

Acknowledgment

State of _________

County of ________ [County]

On [Date] before me, [Name of Notary], notary, personally appeared [Name of Person(s) Involved], personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

Witness my hand and official seal.

Signature ________
Notary

My commission expires: _____

(Seal)