Definition - What does Partnership Agreement mean?
A partnership agreement is a formal written document that lays out the terms of a business agreement between partners who enter a business venture together. This agreement is legally binding. This means that a lawsuit can occur if one or more partners do not adhere to the terms of the partnership agreement.
Justipedia explains Partnership Agreement
A partnership agreement is essentially the legal foundation for a business. It is the document in which partners who are founding a company lay out the exact details of who will get what, and who will assume certain responsibilities. It is up to the partners to negotiate the terms of this agreement. However, it is common for legal counsels to be there to aid with the process. Details that a partnership agreement may include are the length of the partnership, the business purpose of the partnership, each partner's ownership percentage, the investment amounts made by each partner, the responsibilities of each partner, etc.
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