What do you mean by Partnership Agreement

Question

What do you mean by Partnership Agreement?

Answer 1

The relations of partners are essentially governed by the terms of the partnership agreement. A partnership agreement does not have to be in writing to be legally enforceable unless it extends beyond one year, and performance has not yet begun. A partnership agreement can be created orally or it can be implied from the conduct of the partners. A good partnership agreement will clearly set out the business objectives, partners' responsibilities, capital contribution, sharing of profit and losses, procedures for settling disputes (usually by arbitration), and provisions for an efficient and peaceful dissolution. Generally speaking, partners may agree to whatever terms they wish, provided the terms are not illegal and do not offend public policy. However, Ontario’s Partnerships Act sets out certain terms that will be implied if those matters are not expressly covered in the agreement.