With a potential for the rapid growth of your business, it is important that the “rules of the game” among business partners are established right from the start.
A proper contractual structure among founders and partners can go a long way in avoiding disputes in the future.
A business partnership agreement can exist in many forms. For example, an agreement among business partners can be in the form of a partnership agreement (for common law partnerships), an operating agreement (for an LLC), joint venture agreements, bylaws and shareholders’ agreements for a corporation, or a limited partnership agreement for limited partnerships.
Issues may arise in the future that you and your business partners may not even be considering today. For example, a business partner may make multiple investments in the business, and years down the line may require that the funds be repaid with interest, or that he or she be granted additional shares. Similarly, a business partner may become disinterested and quit working on the business, but still insist on the recognition of his or her large ownership percentage.
These issues, as well as many other issues should be addressed from the start. Other examples include: spending authority, tax liability, contracting authority, non-compete provisions, management limitations, death or incapacity of a member, bankruptcy of a member, acceptance of new members or partners, loans to the business, capital calls, share dilution, removal of partners, and many, many more issues.
Our law firm is experienced with the preparation, negotiation, and even the litigation of contracts among business partners. If you are entering into a business with a third party, or if you are already a business with multiple members, shareholders or partners, contact our attorneys today for legal guidance with your partnership agreements.
Additionally, with 10 years of commercial litigation experience, our law firm understands how partnership disputes can best be avoided through contracting and, in the unfortunate event of a business dispute, our attorneys have seen how specific clauses within a contract can play an important role in the outcome of litigation.