Factors to Consider for your NY or NJ Partnership Agreement

When forming a new business and partnership there is (or at least should) be significant excitement and dedication focused on the establishment of your business. Many times this excitement and hard work leads partners to overlook and neglect the requirement of establishing a clear and concise "partnership agreement" or, if applicable,  shareholder agreement.  When things are going well no one mentions the fact that you did not establish a precisely drafted partnership / shareholder agreement will, probably, be unnoticed and of little consequence to your business.  However, as your business matures the nature of your "partnership relationship may also change and the potential for dispute may arise.  While partnership disputes cannot be avoided, the existence of a clearly drafted partnership agreement will serve to minimize the potential that your "partnership dispute" may lead into a costly and time consuming lawsuit.  So what do you need to when starting a New York or New Jersey partnership? "lay out the ground rules in a concisely drafted partnership agreement prepared by an attorney who understands New York and New Jersey partnership laws.

Factors that you should consider and discuss with your business lawyer, include:

• The nature and purpose of the partnership
• Authority of each partner involved in the partnership
• Profit and loss allocation
• Capital contributions of each partner in the partnership
• How to resolve a partnership conflict
• How partnership disputes should be handled
• How to buy out a partner's share
• How to admit new partners into the partnership
• What to do in the event that a partner dies
• Bank account authority in the partnership
  

There are other factors to consider but the key (or at least the first step) is to recognize the significance of having a partnership / shareholder agreement prepared and to start the discussion about your business and what needs to be included in your agreement.  The right lawyer will have the "questions", you will need to think about the "answers".

For additional information about partnership issues in New York and New Jersey, some of Mr. Internicola's additional articles, include:

• Factors to Consider when Dealing with a Partnership or Shareholder Dispute in New Jersey
• New York Partnership Disputes: Fiduciary Duties and Obligations Between Partners and Shareholders
• Partnership Lawsuits in New York and New Jersey: Important Factors to Discuss with Your Lawyer