Forming a partnership can be an effective and inexpensive way to advance your business. By working together, each partner acts on behalf of the other in achieving shared business goals. However, it is vital that the individual interests of you and your partners are protected. Without an agreement setting the terms of the partnership and duties of each partner, there is the potential for costly disputes.
When forming a partnership, you must have the right legal documents in place to ensure that you, your partners and your business are all protected. For access to all the documents you will need to form a partnership, sign up to Lawpath today.
What Legal Documents Do I Need to Form a Partnership?
Term Sheet
Before deciding on a partnership it is important to determine whether you and the other founders of your business are willing to take on the personal and shared liability of this business structure. A term sheet is a precursor document used during the negotiation stages to establish the general terms of a partner joining your partnership.
It should focus on any important points, such as the responsibilities of partners and their future contributions, to be included in any future partnership. While it is not a legally binding document, except for a few clauses like confidentiality and exclusivity, it is an effective way to document the proposed terms before entering into a partnership.
Memorandum of Understanding
A memorandum of understanding is a preliminary written agreement that acts as a helpful guide for negotiating parties to better understand the intentions of the other party, and the terms and details of any future partnership agreement. If you are communicating sensitive information to potential partners, this document is necessary to protect this information. Though the document is not legally binding, keeping a record of what has already been agreed upon is beneficial to achieving the common goals of any future partnership.
Partnership Agreement
A partnership agreement governs the relationship between you and the partners in your business. The agreement specifies how the partnership will be established, the duties and obligations of each partner and the distribution of profits and assets. Setting the terms of your partnership and duties of each partner is a simple yet effective way to prevent misunderstandings and conflict between partners.
Hire a Business Lawyer
It’s imperative to have a strong legal foundation in place before any dispute arises. To ensure that you and your partners get the most out of your partnership agreement, it is important to seek legal guidance from an experienced business lawyer.
What’s Next?
For access to all the documents you need when forming a partnership, sign up to LawPath today. Ensure your documents are prepared to handle any potential partner conflict, get in touch with a business lawyer and have these documents reviewed.
LawPath provides access to all the legal documents you will need to form a partnership. Contact a LawPath consultant on 1800 529 728 to learn more about customising legal documents, obtaining a fixed-fee quote from our network of 700+ expert lawyers or to get answers to your legal questions.
