# Partnership Agreement > Drafts business partnership agreements with roles, profit sharing, decision-making, and exit provisions. Use when forming a business partnership or joint venture. - Skill: `reaperinvest/partnership-agreement` (Agent Skill) - Install (CLI): `npx skillmds@latest add reaperinvest/partnership-agreement` - Raw SKILL.md: https://api.skillmd.com/api/skills/reaperinvest/partnership-agreement/raw - Safety review: pending - Works with: Claude Code, Claude.ai, OpenAI Codex - Category: Coding & Dev Tools - Author: reaperinvest (https://skillmd.com/u/reaperinvest) - Updated: 2026-09-22 - Page: https://skillmd.com/skills/reaperinvest/partnership-agreement --- # Partnership Agreement ## When to Use This Skill Use this skill when you need to: - Draft a partnership agreement for a new business venture - Define roles, responsibilities, and profit-sharing among partners - Establish decision-making processes and dispute resolution - Create exit provisions and buyout terms **DO NOT** use this skill for affiliate agreements, client contracts, or employment agreements. This is for business partner relationships. Always have an attorney review the final agreement. --- ## Core Principle THE BEST TIME TO NEGOTIATE A PARTNERSHIP AGREEMENT IS WHEN EVERYONE IS EXCITED AND GETTING ALONG — BECAUSE THE AGREEMENT ONLY MATTERS WHEN THEY ARE NOT. --- ## Phase 1: Partnership Details ### Required Inputs | Input | What to Ask | Default | |-------|------------|---------| | **Partner names** | "Who are the partners? (names and entity types)" | No default — must be provided | | **Business name and type** | "What is the business and entity type?" | No default — must be provided | | **Capital contributions** | "What is each partner contributing? (money, assets, IP, sweat equity)" | No default — must be provided | | **Ownership split** | "What is the ownership percentage split?" | No default — must be discussed | | **Roles** | "Who does what in the business?" | No default — must be defined | | **Profit/loss split** | "How are profits and losses divided?" | Same as ownership split | **GATE: Do not proceed without partner names, ownership split, and capital contributions.** --- ## Phase 2: Agreement Structure ``` ## Partnership Agreement **This Partnership Agreement** is entered into as of [Date] by: Partner 1: [Name] ("Partner A") Partner 2: [Name] ("Partner B") ### 1. Formation and Purpose The Partners form [Business Name], a [general partnership / LLC / other entity] organized under the laws of [State], for the purpose of [business description]. ### 2. Capital Contributions | Partner | Contribution | Value | Ownership % | |---------|-------------|-------|------------| | Partner A | [Cash / IP / equipment / services] | $[X] | [X]% | | Partner B | [Cash / IP / equipment / services] | $[X] | [X]% | Additional capital contributions require unanimous consent. No partner is required to make additional contributions beyond the initial amount. ### 3. Profit and Loss Distribution Profits and losses shall be distributed as follows: - Partner A: [X]% - Partner B: [X]% Distributions shall be made [monthly / quarterly / annually] after maintaining a minimum operating reserve of $[X]. Each partner shall receive guaranteed payments of $[X]/month for management services before profit distribution (if applicable). ### 4. Roles and Responsibilities | Partner | Role | Key Responsibilities | |---------|------|---------------------| | Partner A | [Title] | [List primary responsibilities] | | Partner B | [Title] | [List primary responsibilities] | ### 5. Decision-Making **Day-to-day operations:** [Partner A / Either partner] may make decisions for expenses under $[X] without the other partner's consent. **Major decisions requiring unanimous consent:** - Expenditures over $[X] - Hiring or firing employees - Entering contracts over $[X] - Taking on debt or loans - Adding new partners - Changing the business direction or model - Selling business assets **Deadlock resolution:** If partners cannot agree, they shall: 1. Discuss and attempt to resolve within [7] days 2. Engage a mutually agreed mediator within [30] days 3. If mediation fails, [arbitration / buyout trigger / other mechanism] ### 6. Management and Authority Each partner has the authority to: - Bind the partnership in the ordinary course of business - Access business bank accounts - Execute contracts under $[X] No partner may, without the other's consent: - Admit new partners - Assign partnership interests - Pledge partnership assets as collateral - Enter into agreements exceeding $[X] ### 7. Compensation and Draws | Component | Partner A | Partner B | |-----------|----------|----------| | Management salary | $[X]/month | $[X]/month | | Profit distributions | [X]% | [X]% | | Expense reimbursement | Actual, pre-approved | Actual, pre-approved | ### 8. Exit Provisions **Voluntary withdrawal:** A partner may withdraw with [90] days written notice. The remaining partner has the right to purchase the departing partner's interest. **Buyout valuation:** The departing partner's interest shall be valued using [method: book value / fair market value / formula / independent appraisal]. **Payment terms for buyout:** [Lump sum within 90 days / installments over 12-24 months with interest at X%]. **Right of first refusal:** Before selling to a third party, the selling partner must offer their interest to the remaining partner(s) at the same price and terms. **Death or disability:** The deceased/disabled partner's interest shall be [purchased by remaining partner(s) / transferred to estate]. Consider funding with key-person life/disability insurance. ### 9. Non-Compete During the partnership and for [12-24] months after exit, no partner shall engage in a competing business within [geographic area or industry scope]. ### 10. Confidentiality All business information, customer lists, strategies, and financials are confidential. This obligation survives termination. ### 11. Dispute Resolution Disputes shall be resolved through: 1. Good faith negotiation (14 days) 2. Mediation (30 days) 3. Binding arbitration in [jurisdiction] ### 12. Dissolution The partnership shall dissolve upon: - Unanimous written consent - A partner's death (unless buyout exercised) - Bankruptcy of the partnership - Court order Upon dissolution, assets are liquidated and distributed in order: 1. Third-party debts 2. Partner loans to the partnership 3. Capital account balances 4. Remaining assets per ownership percentages ``` --- ## Phase 3: Customize - Adjust decision-making thresholds to match business scale - Define specific non-compete terms appropriate to the industry - Include intellectual property assignment if either partner brings IP - Add vesting schedule for sweat equity partners if applicable --- ## Phase 4: Finalize ``` ## Partnership Agreement Checklist - [ ] Ownership percentages are agreed and documented - [ ] Capital contributions are valued and recorded - [ ] Roles and responsibilities are clearly defined - [ ] Profit distribution method is explicit - [ ] Major decision thresholds are set - [ ] Exit/buyout provisions are defined with valuation method - [ ] Non-compete terms are reasonable and enforceable - [ ] Dispute resolution process is clear - [ ] Dissolution procedures are documented - [ ] Agreement reviewed by attorney for each partner (separate attorneys recommended) - [ ] Both partners have signed ``` --- ## Example: Two-Person Digital Agency **Partners:** Anna (60% - strategy, sales) and Ben (40% - design, delivery). **Capital:** Anna contributes $30K cash. Ben contributes $10K cash + existing client relationships. **Salaries:** Anna $5K/month, Ben $4K/month before profit split. **Exit:** 90-day notice, buyout at 3x trailing 12-month net profit, payable over 18 months. **Decision threshold:** Unanimous for anything over $5K. --- ## Anti-Patterns - **50/50 split with no tiebreaker** — equal partnerships with no deadlock resolution mechanism lead to paralysis. Define a tiebreaker. - **No exit provisions** — the most important part of a partnership agreement is how to end it. Never skip this section. - **Handshake agreements** — "we trust each other" is not a legal strategy. Write it down. - **Same lawyer for both partners** — each partner should have independent legal review to protect their interests. - **No valuation method for buyouts** — agreeing to "fair value" without defining how it is calculated leads to fights. Pick a method now. --- ## Recovery - **Already in partnership without an agreement:** Create one immediately. It is harder to negotiate after the business is running, but essential. - **Partners disagree on terms during drafting:** This is the time to discover incompatibilities. Better to walk away now than after launching. - **Unequal contributions:** Structure with vesting, guaranteed payments, or adjusted profit splits to reflect different contribution types. - **Partner wants to leave:** Follow the exit provisions. If no agreement exists, consult an attorney immediately to negotiate a separation.