Ideally, the agreement of two or more individuals to form a partnership should be expressed in a written contract, called the partnership agreement or articles of co-partnership. The partnership agreement contains such basic information as the name and principal location of the firm, the purpose of the business, and date of inception. In addition, it should specify relationships among the partners, such as:
- Names and capital contributions of partners
- Rights and duties of partners
- Basis for sharing net income or net loss.
- Provision for withdrawals of assets.
- Procedures for submitting disputes to arbitration
- Procedures for the withdrawal or addition of a partner.
- Rights and duties of serving partners in the event of a partners’ death.
The agreement should attempt to anticipate all possible situations, contingencies, and disagreements. The help of a lawyer is highly desirable in preparing the agreement.