Before entering into business with a partner, you must establish a written agreement. “My recommendation is to include a mediation clause in your partnership agreement in order to set up a procedure that will allow you to resolve major conflicts,” said Susan Solovic, serial entrepreneur and bests selling author of It`s Your Biz. A mediation clause can often resolve disputes and repair labour relations. Although not all partnership agreements are designed in the same way, they should always contain the following elements. It is customary for partnerships to continue for an indefinite period of time, but there are cases where a company must be dissolved or discontinued after passing a certain milestone or a certain number of years. A partnership agreement should contain this information, even if the timetable is not specified. Here is a list of the main areas that cover most partnership agreements. You and your partners to become must take these issues into account before defining the conditions in writing: the partnership power, also known as the commitment power, should also be defined in the agreement. The company`s commitment to a debt or other contractual agreement may expose the entity to insurmountable risk. In order to avoid this potentially costly situation, the partnership agreement should provide for conditions for the partners entitled to retain the company and the process implemented in such cases. The most common conflicts within a partnership are due to decision-making challenges and disputes between partners.
The Partnership Agreement shall establish decision-making conditions which may include a coordination system or another method of control and balance between the partners. In addition to decision-making procedures, a partnership agreement should contain instructions for resolving disputes between partners. This objective is usually achieved through a mediation clause in the agreement, which aims to provide a means of settling disputes between partners without the need for judicial intervention. This is not an all-inclusive list at all. Make sure that you and your partners consult a professional advisor who can establish a partnership agreement for you. A lawyer can also advise you and make sure you`ve thought through and covered all the necessary elements you need to manage, protect, and grow your business. . .