Partnership Agreement

From: Aaron Dwyer


Hi all

I am looking at entering a partnership agreement with a friend to start property reno's.

I am in Brisbane CBD.

I have a quote of $550 from a local solicitor, is this a decent price.??

We have found some agreements on the internet and changed them around until we were both happy.

If we have all the wording prepared do we need to go to a solicitor.??

Can we just have a JP witness us signing the document.??

Thanks
Aaron Dwyer
 
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Reply: 1
From: Rolf Latham


Hi Aaron

Friends and family and JVs involving money and debt ?

Pay the money for a proper aggreement and
$ 550 sounds cheap.

Ta


Rolf
 
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Reply: 2
From: Scott Elsom


Aaron

Pay the money and get it done properly. Also ask you Solicitor (and Accountant) if a partnership is the best way to go for your situation...often it is not.

My advice...avoid any partnerships/JVs...do it on your own...life is much simpler that way!

Scott
 
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Reply: 2.1
From: Mike .


Hi Aaron,

Could you please provide URLs to Partnership Agreements that you found online? Thanks - Mike
 
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Reply: 2.1.1
From: Dale Gatherum-Goss


Hi Aaron

As you probably know, I'm an accountant . . . and so it is with 20 years of experience that I warn you against using a partnership.

Partnerships expose each of you to the full amount of a debt if something goes wrong. So, if you have assets and your partner does not, who do you think the creditors will chase?

As already suggested, please talk to a solicitor and an accountant before doing something that you will regret later.

I'm sorry I'm not enthusiastic for you, I'm just worried. Step carefully please.

Dale
 
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Reply: 2.1.1.1
From: Asy .


Also,

To emphasise what Dale said, in a partnership you have JOINT liability, that means that each of you is jointly liable for any actions taken by either of you in the name of the partnership. So, if your partner buys a new car, you are jointly liable for it, personally.

If you HAVE to go into business with a family member, you need to seriously consider forming a company, or even better both form a company each and do the project as a JV between your companies.

I always like to say, when going into business with family/friends, how will I feel if it all goes awry? Is this something I can walk away from with no remorse, or bad feeling? If not, don't do it.

It is seriously not a good idea to mix business and family (unless you're Sicillian, but that's a whole 'nother post!!)
hehe.

Good luck with whatever you decide to do!!

asy


"Don't forget what happened to the guy who suddenly got everything he ever wanted...
He lived happily ever after.
(Willy Wonka).
 
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Reply: 2.1.1.1.1
From: Paul Zagoridis


And to further rain on the partnership parade...

Creditors do not have to chase the poor partner AT ALL before going after the "rich" partner.

A bit like guaranteeing a loan from a bank really. The bank does not have to sue the borrower and win judgement to call on most guarantees. The borrower fails to perform, the guarantee is called.

Fun yes?

You better get a lawyer son. You better get a real good one.

Plus your partner will need independent legal advice too.

Paul Zag
Dreamspinner
The Oz Film Biz site is archived at...
http://wealthesteem.dyndns.org/
 
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Partnership Agreement (long)

Reply: 2.1.2
From: Aaron Dwyer


I can't find it on the net anymore, but here is the copy I pulled down at the time. Use it for a basis of the agreement.

--

PARTNERSHIP AGREEMENT


This PARTNERSHIP AGREEMENT is made on ____________, 19__ between ______________________ and ________________ of ____________.

1. NAME AND BUSINESS. The parties hereby form a partnership under the name of ___________________ to conduct a _______________________. The principal office of the business shall be in _____________________.

2. TERM. The partnership shall begin on ___________, 19__, and shall continue until terminated as herein provided.

3. CAPITAL. The capital of the partnership shall be contributed in cash by the partners as follows: A separate capital account shall be maintained for each partner. Neither partner shall withdraw any part of his capital account. Upon the demand of either partner, the capital accounts of the partners shall be maintained at all times in the proportions in which the partners share in the profits and losses of the partnership.

4. PROFIT AND LOSS. The net profits of the partnership shall be divided equally between the partners and the net losses shall be borne equally by them. A separate income account shall be maintained for each partner. Partnership profits and losses shall be charged or credited to the separate income account of each partner. If a partner has no credit balance in his income account, losses shall be charged to his capital account.

5. SALARIES AND DRAWINGS. Neither partner shall receive any salary for services rendered to the partnership. Each partner may, from time to time, withdraw the credit balance in his income account.

6. INTEREST. No interest shall be paid on the initial contributions to the capital of the partnership or on any subsequent contributions of capital.

7. MANAGEMENT DUTIES AND RESTRICTIONS. The partners shall have equal rights in the management of the partnership business, and each partner shall devote his entire time to the conduct of the business. Without the consent of the other partner neither partner shall on behalf of the partnership borrow or lend money, or make, deliver, or accept any commercial paper, or execute any mortgage, security agreement, bond, or lease, or purchase or contract to purchase, or sell or contract to sell any property for or of the partnership other than the type of property bought and sold in the regular course of its business.

8. BANKING. All funds of the partnership shall be deposited in its name in such checking account or accounts as shall be designated by the partners. All withdrawals therefrom are to be made upon checks signed by either partner.

9. BOOKS. The partnership books shall be maintained at the principal office of the partnership, and each partner shall at all times have access thereto. The books shall be kept on a fiscal year basis, commencing ______ and ending _______, and shall be closed and balanced at the end of each fiscal year. An audit shall be made as of the closing date.

10. VOLUNTARY TERMINATION. The partnership may be dissolved at any time by agreement of the partners, in which event the partners shall proceed with reasonable promptness to liquidate the business of the partnership. The partnership name shall be sold with the other assets of the business. The assets of the partnership business shall be used and distributed in the following order: (a) to pay or provide for the payment of all partnership liabilities and liquidating expenses and obligations; (b) to equalize the income accounts of the partners; (c) to discharge the balance of the income accounts of the partners; (d) to equalize the capital accounts of the partners; and (e) to discharge the balance of the capital accounts of the partners.

11. DEATH. Upon the death of either partner, the surviving partner shall have the right either to purchase the interest of the decedent in the partnership or to terminate and liquidate the partnership business. If the surviving partner elects to purchase the decedent's interest, he shall serve notice in writing of such election, within three months after the death of the decedent, upon the executor or administrator of the decedent, or, if at the time of such election no legal representative has been appointed, upon any one of the known legal heirs of the decedent at the last-known address of such heir. (a) If the surviving partner elects to purchase the interest of the decedent in the partnership, the purchase price shall be equal to the decedent's capital account as at the date of his death plus the decedent's income account as at the end of the prior fiscal year, increased by his share of partnership profits or decreased by his share of partnership losses for the period from the beginning of the fiscal year in which his death occurred until the end of the calendar month in which his death occurred, and decreased by withdrawals charged to his income account during such period. No allowance shall be made for goodwill, trade name, patents, or other intangible assets, except as those assets have been reflected on the partnership books immediately prior to the decedent's death; but the survivor shall nevertheless be entitled to use the trade name of the partnership. (b) Except as herein otherwise stated, the procedure as to liquidation and distribution of the assets of the partnership business shall be the same as stated in paragraph 10 with reference to voluntary termination.

12. ARBITRATION. Any controversy or claim arising out of or relating to this Agreement, or the breach hereof, shall be settled by arbitration in accordance with the rules, then obtaining, of the American Arbitration Association, and judgment upon the award rendered may be entered in any court having jurisdiction thereof. In witness whereof the parties have signed this Agreement.

Executed this ______________ day of _________________, 19_____ in [CITY], [STATE].



--
Aaron Dwyer
0400 856 030
 
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