Your Business Needs A Well-Written Partnership Agreement

Last updated on November 18, 2025

Whether you started a business with a good friend or just another entrepreneur whom you really respect, it may soemtimes feel like a handshake agreement is good enough to get you through any trouble your business may encounter. But make no mistake: working without a written partnership agreement can threaten the life of your company, and your financial stake in it and even affect your legal liability.

Even if you and your partner have a habit of negotiating in good faith, you will still encounter unexpected changes, disagreements and confusing situations with no clear solution. A well-drafted partnership agreement allows you to plan methods to address issues may be worried about, but also address other issues you may not have even considered before they threaten your business. At R3M Law, LLP, our commercial law attorneys are ready to guide you through the process and draft a thorough, and complete partnership agreement that protects your interests to the extent possible.

What Is Included In A Partnership Agreement?

No document can cover every scenario or contingency. But when it comes to partnership agreements, more detail is always better. The goal is to take the guesswork and uncertainty out of how to respond to the most likely scenarios as well as the worst-case scenarios. Your agreement will typically include details such as:

• Each partner’s duties and management powers
• What percentage of the business each partner owns
• How profits and losses are distributed
• How long the partnership will last
• Under what circumstances the partnership can be terminated
• How disputes are to be resolved (mediation, arbitration, litigation, etc.)
• How and when new partners can be brought in
• How to manage partner buyouts and under which conditions these may be mandatory
• Deciding on a managing partner and spelling out the liability of each partner

The rules that each partner must abide by and the duties they owe other partners (noncompete agreements, avoiding potential conflicts of interest, etc.) are a major component that you must work out early.

Three Types Of Partnership

Most people believe business partnerships come in only one variety, two – or more – people pooling their resources to run a business. However, that’s not exactly the case. While the above is the most common type of partnership – often called a direct partnership or simple partnership – there are two others:

• Joint ventures: Businesses that work  together to complete a project, and only exist for a limited period of time.
• Limited partnerships: Where one or more of the partners in a business have limitation on their scope and input and liability.

However, the choice of your partnership is going to vary greatly depending on your view of the problem and the opportunities available with each type.

Why You Should Work With A Lawyer

Our business law attorneys will work with you to create a partnership agreement that addresses every aspect of your business and protects what is most important to you. By creating a customized agreement, we can actually help you prevent or minimize the risk of a partnership dispute. And if one does occur, we are prepared to strongly advocate for your interests in and out of the courtroom.

Discuss Your Options With Our Experienced Attorneys

R3M Law, LLP, is located in Manhattan and serves clients throughout New York City. To learn how we can help you draft a partnership agreement, represent you in a partnership dispute or any other corporate or commercial legal matter, call us at (877) 373-6811 or send us an email.