Create a Partnership Agreement

  Take the time to create a good partnership agreement

It is not a big surprise that everyone who considers entering a partnership should also think of a suitable partnership agreement. It is surprising how many people still neglect its importance or totally forget about it till the very last moment.  The consequences are normally not great for the businesses (like most things which are not well planned). Do not rush to be one of these people, take the time to create a good partnership agreement.

Before even thinking of the partnership agreement, it is essential that you know why you enter the partnership. A common answer by many people why they have had a partnership agreement is that it seemed like a good idea. However, many of them have problems to elaborate in what way it was good for the business. Do not get carried away, think how the agreement can be useful for your business. Think how it cannot be useful for your business, either. In other words, you need to know what you expect to come out of the whole thing. If you do not, maybe the better idea here is to reconsider your decision to have that partnership. 

After you have clarified your expectations, you need to think how to create the partnership agreement conditions so that they have a good chance to happen. You need to include the clauses of the partnership agreement to justify its existence. The first and most important thing is who the partners are. Here should stay not only their names but also address, tax numbers, etc. The next thing to include is the object(s) of the agreement. If you have more than one object, do not hesitate to include them in different points. Be sure to cover everything that you think might cause a problem. Better include something unclear than not. If you have several different issues, it is not a problem to create more than one partnership with the very same partner. It is not illegal and if it is justifiable, you can do that, as well. Be aware that the administrative costs and the time involved in the process will be undoubtedly more than a single agreement. However, everything depends on the case – so be as flexible as you can. 

It is highly recommended that the partnership agreement be concise, clear and relevant for the particular case. But most of all, it needs to be effective and serve its purpose. Do not include clauses that have no reference to the agreement like hobbies, fiction, etc. Stick to the point! If you have an agreement for apple delivery, discuss the prices, delivery dates, quality, etc. Do not write what would happen if you get delivered tomatoes. One hint – if you want tomatoes so much, include them in another point. Be very clear – include quantitative measures wherever it is possible. “Hundred kilograms” has much more meaning than “some amount, the same is with “between 6^th and 8^th July” than “sometime in July”.