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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
7. Division of Profits and Losses. The net profits and
losses of Partnership will be equally divided between the
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.
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
a. Borrow or lend money;
b. Make, deliver, or accept commercial paper;
c. Execute any mortgage, security agreement, bond, 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
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
14. No Sale or Assignment of, or Granting Lien on
Partnership Interest. Without the other's written consent, no
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
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
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
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;
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
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
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.
This Section for Notary:
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.
My commission expires: _____