Michelle Cohen Levy

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Why even the best of friends need a strong partnership agreement

| Oct 20, 2020 | Business Law |

You and your best buddy from college have a great idea for a fledgling business. The two of you are great friends and want to go into business together and start making money. You’ve never had a disagreement, let alone a full-blown argument.

There’s no real need to have a formal partnership agreement, is there?

If you want your friendship to survive your business endeavor, there better be. Going into business with somebody is very different from buying season tickets together or taking a weekend trip with them. You are planning on sinking a lot of money into your venture. The two of you need to be on the same legal page together with your resources and enterprise.

Crafting a partnership agreement involves determining your shared vision for the business and how that vision will manifest. For instance, each partner’s role should be delineated clearly so each partner knows their role and can stay in their lane.

Plan for every “what if” circumstance

Your partnership agreement should dictate the terms of what happens in the event that one partner wants out, gets divorced or dies. When a dispute arises, how will it be resolved in such a way as to preserve the partnership going forward?

The partnership agreement can get quite granular. Some partners might prefer a more broad description, but it the terms are too broad, they could one day be subject to interpretation by a court who could potentially rule against you.

Plan for business continuity

In the unlikely event that both you and your partner should die in the same event, what will happen to your business? This, too, should be addressed in your partnership agreement so business continuity can be preserved.

Working with a Fort Lauderdale business law attorney allows you to devise the perfect partnership agreement to reflect your circumstances.