This is a partnership agreement between ABC and XYZ dated dd/mm/yyyy. It will supersede any pre-existing partnership agreements occurring between these parties.
1. Partnership Name and Details of Business
The partnership agreement between ABC and XYZ has come into being for the purpose of conducting XXX business. The business entity will be known as VVVV. The head office of VVVV will be located in the following address:
2. Duration of Partnership Agreement
The partnership agreement will begin on dd/mm/yy and will continue indefinitely unless otherwise agreed by both parties.
3. Capital Contributions
Each party shall contribute $XXXX to the firm subject to the following conditions as provided in the partnership agreements:
3.1. Capital contributions from each partner shall be deposited in separate capital accounts, which are accessible to both parties.
3.2. As per the terms of partnership agreements, withdrawal of capital requires the signed approval of both parties
3.3. The capital accounts shall always be preserved in the same proportion as that of the profit and loss ratio.
3.4. The capital contribution of each partner is not entitled to interest unless otherwise agreed by both parties.
4. Sharing of Profits and Losses
As per partnership agreements, clear definitions have to be made as to the profit sharing ratio. In this firm, profits and losses shall be shared between both parties in the following ratio – XX:YY. The manner of profit and loss sharing is contained below:
4.1. An income account will be created for each partner.
4.2. All profits shall be credited to the income account and losses charged to it.
4.3. In the event that sufficient cash is not available in the income account to cover the losses, it will be deducted from the relevant partner’s capital account.
4.4. Partners are permitted to withdraw funds from their income account however they will not receive any salary.
5. Management Responsibilities
According to partnership agreements, management responsibilities have to be defined and adhered to. This agreement stipulates that both ABC and XYZ shall have equal share in the ownership and management of the firm. The following additional conditions are included:
5.1. Neither party is permitted to participate wholly or partly in the functioning of any other firm related or unrelated to VVVV.
5.2. As is common in partnership agreements, neither party is permitted to take any decision on behalf of the firm without the approval of the other party. This includes: i. Offering funds on loan or taking funds on loan.
ii. Signing any agreement relating to purchase, sale, lease or mortgage of firm assets. iii. Making an investment in capital equipment, property, office space or other large investment.
6. Financial Accounting
The firm shall adopt financial accounting according to GAAP. They shall be closed on a fiscal basis and subjected to an annual audit. The books shall be maintained in the head office located at the address contained in section 1 of this partnership agreement.
7. Banking and Operating of Working Capital
On signing of this partnership agreement, all funds relating to VVVV shall be deposited in a checking account opened at bank approved by both parties. The account shall be in the name of VVVV and both parties shall receive checkbooks.
8. Dissolution of the Partnership
As per the terms of partnership agreements the following conditions shall apply in the event both parties want to terminate the agreement. The firm’s name shall be sold along with all assets. Funds recovered shall be distributed with the following priority:
a. Priority 1 – Settle all outstanding liabilities and liquidation expenses including legal fees.
b. Priority 2 – Restoration of each party’s income account as per the profit-sharing ratio stipulated in section 4 of this partnership agreement. Disbursal of these funds.
c. Priority 3 – Restoration of the capital account of each party as per the profit-sharing ratio stipulated in Section 4 of this partnership agreement. Disbursal of these funds.
9. Death of a Partner
In the unfortunate event of death of either partner, the surviving partner enjoys the right to dissolve the partnership or buy out the shares of the deceased. Liquidation of the partnership shall be as per section 8 of this partnership agreement. Purchase of the deceased partner’s shares shall have the following conditions: 1. The surviving partner shall send a notice of intention to purchase the deceased partner’s share within three months.
2. The purchase price shall be the value of the capital account and income account at the time of death of the partner.
3. No additional value shall be placed on goodwill, trademarks, or other intangible assets.
4. The surviving partner enjoys the right to continue to use the name of the firm.