Area of Law: Business Law
Answer # 214
Partnership agreementsRegion: Ontario Answer # 214
If you decide to form a partnership, you should put a partnership agreement in place. A partnership can exist without having a formal, legal partnership agreement, but such an agreement can help you avoid problems.
A partnership agreement establishes rules about how the business is going to be run. It usually includes such things as:
- who the partners are,
- what bank the business will use,
- how the profits or losses of the business are to be divided among the partners,
- what the capital contribution of each partner will be,
- what the role and responsibilities of each partner will be, and
- how the partnership can be dissolved.
Establishing these business details at the beginning of a business relationship can help avoid disagreements in the future.
Many of these details can be decided between the partners before they approach a lawyer to finalize the agreement. However, creating a partnership agreement is a detailed legal process. You should have a lawyer help you create the agreement, or at least have a lawyer review the agreement before you sign it. More information about starting a business or forming a partnership in Ontario can be found at ServiceOntario, or visit the Government of Canada, Canada Business Ontario.
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