Business Partnership Agreement
A foundational agreement between business partners covering contributions, profit sharing, decision-making, and dissolution.
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A business partnership agreement is a written contract between two or more individuals or entities who agree to carry on a business together with a view to profit. In Canada, a general partnership is created by operation of law the moment two or more people carry on business together — meaning the absence of a written agreement does not prevent a partnership from existing, but it does mean the partnership is governed by the default rules of provincial partnership legislation, which may not reflect what the parties actually intend.
What it should cover
A comprehensive partnership agreement addresses: the name, purpose, and term of the partnership; each partner's capital contribution; the allocation of profits and losses; decision-making authority and voting rights; the roles and responsibilities of each partner; restrictions on outside business activities; the process for admitting new partners; and the procedure for dissolving the partnership or buying out a departing partner.
Why a written agreement matters
Without a partnership agreement, disputes about profit sharing, management authority, or the departure of a partner are resolved by provincial default rules — which are blunt instruments not designed for any particular business. A well-drafted agreement tailored to your specific business dramatically reduces the risk of costly litigation.