LEGAL HELP: BUSINESS PARTNERSHIPS
AGREE TO AGREE (Or... Good friends make good papers.)
The "Legal Help" series is brought to you by:
The Professional Corporation of the Law Office of Robert A. Dinnen
4 Government Road East, Kirkland Lake, Ontario P2N 1A2
Telephone (705) 567-7979 - Fax (705) 567-7980
41 Third Street, P.O. Box 907, Englehart, Ontario P0J 1H0
Telephone (705) 544-8878 - Fax (705) 544-8444
Email [email protected]
GET OFF TO A GOOD LEGAL START
Preliminaries
- Identify the partners, the nature of the business and each partner's function.
- Decide where the business will be conducted and determine a business name.
Agreements On How Your Business Will Be Carried On
- Which of the partners will have authority to dispose of assets of the partnership, operate bank accounts, disburse partnership funds, borrow money on partnership accounts, issue security on partnership assets and act as the other partners' agent?
- Which partners will covenant to devote their full time and attention to the business?
- Do all partners covenant to conduct themselves in the utmost good faith and to exercise a reasonably prudent degree of care, diligence and skill?
- The business should be protected from the individual partners' separate debts.
- Ascertain your expectations with respect to future capital infusions.
- Agree on proper books of account containing complete entries of all activities and agree that all transactions will go through the bank.
- Determine whether the business may become indebted without the consent of one or more partners.
- Decide the proportions in which indebtedness and profit are to be shared among the partners.
- Place limits on amounts that may be withdrawn, so as to ensure that certain minimum amounts will be left in the business as working capital.
- Consider providing for arbitration of any dispute that may arise as to the interpretation or implementation of the partnership agreement.
Agree Now On What Will Happen When Someone Leaves
- Consider providing now for a mechanism to be followed, such as a right of first refusal, which will allow for the continuation of the business in the event of the departure of a partner.
- Do ensure that you agree now upon a non-competition covenant which will apply after the departure of a partner. Decide its time period and geographic coverage, remembering that it has to be reasonable.
- Insist also upon a confidentiality covenant.
See us before you begin and your chances of success will improve.
The "Legal Help" series is brought to you by:
The Professional Corporation of the Law Office of Robert A. Dinnen
4 Government Road East, Kirkland Lake, Ontario P2N 1A2
Telephone (705) 567-7979 - Fax (705) 567-7980
41 Third Street, P.O. Box 907, Englehart, Ontario P0J 1H0
Telephone (705) 544-8878 - Fax (705) 544-8444
Email [email protected]