DIY Legal Forms

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Professional Partnership Agreement

1. Introduction. Agreement to form a partnership (Partnership) made [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 practice of [nature of practice]. 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.

4. License Representations. Each Partner represents to the other Partner(s) that the Partner is licensed to practice [nature of practice] in [state].

5. Partners' Capital Contributions. The Partnership capital shall be contributed by the Partners, partly in cash and partly in personal property. The cash contribution 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]

6. 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.

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

[Alternative Paragraph]

7. 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.

8. 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.

9. Partners' Right to Salary and Drawings. Neither Partner will 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]

9. Partners' 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 purpose 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.

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

11. Management of Partnership. Each Partner shall have an equal voice in the management of Partnership, and each shall devote the Partner's full time to the conduct of its practice. 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 practice.

12. Charging Fees. No Partner is to render any professional service without charging a fee except upon the agreement of the other Partner.

13. Fees Not Part of Partnership Income. [Name], a Partner in this Partnership, will continue to service [name] alone and for the Partner's own benefit without accounting to the other Partner.

14. No Sale or 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 the outside party will have an interest in Partnership; or

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

15. Partnership Bank Account. All Partnership funds shall be deposited in its name in an account with the [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.

16. 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, losses, and the balances in the Partners' income and capital accounts.

17. Rents, Wages, Library Expenses. All rents, wages, library maintenance costs, equipment expenses, and other business and professional costs and expenses will be paid from Partnership funds.

18. New Partners, New Associates. No new Partners or new associates will be admitted to the firm or hired by the firm except with the consent of all the Partners.

19. Malpractice or Negligence. A Partner guilty of malpractice or negligence will reimburse Partnership for damages sustained by Partnership because of the Partner's malpractice or negligence, except to the extent Partnership is covered by insurance.

20. 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 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.

21. Effect of a Partner's Retirement or Withdrawal. The retirement or withdrawal of a Partner will not affect Partnership's continuance. The retiring or withdrawing Partner's interest shall be purchased by the remaining Partner in proportion to the Partner's interest in the distribution of Partnership income. The purchase price shall be computed in accordance with Paragraph 23 of this Agreement. Should any client elect not to continue as a client of Partnership because of the Partner's retirement or withdrawal, that client shall be billed by Partnership for the value of Partnership's services to the client up to and including the date of retirement or withdrawal. The retiring or withdrawing Partner shall be entitled to the Partner's proportionate share of that billing in accordance with Paragraph 23 of this Agreement.

22. Effect of Partner's Death. The death of a Partner will not affect Partnership's continuance. The deceased Partner's partnership interest shall be purchased from the Partner's estate by the surviving Partner. The purchase price shall be computed in accordance with Paragraph 23 of this Agreement. The estate of the deceased Partner shall be entitled to share in the value of all unbilled work as of the date of death of the Partner in accordance with Paragraph 23 of this Agreement.

23. Purchase Price of Retired, Withdrawn, or Deceased Partner's Partnership Interest. The purchase price of a retired, withdrawn, or deceased Partner will be an amount equal to the balance in the 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 Partner's death, withdrawal, or retirement. If the Partner dies, withdraws, or retires in the last six months of any fiscal year, that fiscal year shall be one of the [number] 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.

24. Suspension or Revocation of Partner's License to Practice. If a Partner's license to practice is suspended or revoked, the Partner will be deemed to have requested retirement as of the date of the suspension or revocation. Paragraph 21 will then apply except as prohibited by law.

25. Arbitration of Dispute. 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.

IN WITNESS WHEREOF, the parties have signed this Agreement the day and year first above written.

[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)