Business Partnership Contracts Lawyer Houston
I never recommend this form of business ownership to clients, unless, it is the only way they can achieve their objectives in a fair manor. There are numerous other ways that investors can protect their investment, wealth, and friendship, rather than entering into a general partnership. A partnership agreement is a formal contract between the partners that describes their rights and responsibilities. Common provisions include clauses governing capital calls, partnership interests and the division of business profits. A partnership agreement may contain dissolution provisions, or the partners may decide to create a separate dissolution of partnership agreement.
Now that we have that covered, let’s discuss the dissolution of partnership. A dissolution of partnership agreement is a formal document that describes the process the partners will follow to wind up business operations and dissolve the company. One particular advantage this type of agreement is the ability to tailor the agreement to meet the specific needs of the parties. With a dissolution of partnership agreement in place, the partners can avoid state default rules, which may not meet the exact needs of the partners or the business.
Partnerships are usually finite business relationships — general partnerships with two partners, for example, dissolve when one of the partners dies or leaves the business. A dissolution of partnership agreement helps set an ending date or otherwise plan the dissolution procedure. This often involves defining what roles the partners will play during the dissolution of the business. One partner might handle the liquidation of assets, while another partner notifies customers and businesses that the partnership is ending. The dissolution of partnership agreement answers questions such as when the business should dissolve (such as on a specific date or on the happening of a particular event) and concerns about how to divide property among the partners.
Liability protection is another advantage to dissolution of partnership agreement. Many dissolution agreements contain provisions such as a release of future claims against the partners and a time limit to bring any claims or arbitrate disputes. Liability provisions can help avoid potentially costly and time consuming litigation between the partners that arises after the business ends. Additionally, the dissolution of agreement is a contractual document, binding the partners together. Being a legal document, the partners must comply with the provisions or face potential liability for breach of contract.
Mansoor Ansari J.D., LL.M. (TAX)
Business Partnership Contracts Lawyer Houston
