Going into business with a partner? Great! But before you shake hands and dive in, there’s one thing you absolutely need—a solid partnership contract. Whether you’re teaming up with a friend, a colleague, or someone new, a clear agreement sets the ground rules and protects you both if things ever go sideways. At The Law Offices of Paul H. Appel, we’ve seen what can go wrong when partners skip this step. And trust us, it’s not pretty. That’s why we help business owners in Freehold and across New Jersey build airtight business partnership agreements from the start.
Why You Need a Partnership Contract
You might think trust and good intentions are enough. They’re not. Even in the best partnerships, disagreements happen. A well-written agreement in partnership makes sure you’ve got a playbook when issues come up, so you’re not scrambling or heading to court.
It’s more than just a formality. It’s protection.
What Should Be in a Business Partnership Agreement?
Here’s what every strong agreement should include:
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Ownership Breakdown
Start by defining who owns what. Will it be a 50/50 split? Or something else based on investment, workload, or expertise? Make sure the numbers are crystal clear in your business partnership contract—you don’t want misunderstandings down the road.
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Roles and Responsibilities
Who handles what? Maybe one of you is in charge of finances while the other handles marketing. Spell it out. The more detailed you are, the less chance there is for confusion—or resentment—later.
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Capital Contributions
This one’s big. Outline how much each partner is putting into the business—money, property, or other resources. Also, address how future contributions will be handled if the business needs more funding.
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Profit and Loss Distribution
How will profits be split? What about losses? Will everything be equal, or will it reflect ownership percentages? A good partnership agreement will leave room to customize this based on what works for your business.
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Decision-Making Authority
Set rules for how decisions get made. Does every partner have a vote? Are some decisions left to certain people? What happens if you don’t agree? These answers should be built into your agreement, so your business doesn’t stall when there’s a disagreement.
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Dispute Resolution
Speaking of disagreements, you’ll want a plan in place to resolve them. Mediation, arbitration, or majority vote—there’s no one-size-fits-all answer, but there should be a clear process in your business partnership agreement.
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Exit Strategy or Buy-Sell Terms
What happens if one partner wants out? Life changes, and people move on. Your agreement should include an exit plan: how to handle ownership transfers, buyouts, retirement, or even death.
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Non-Compete and Confidentiality Clauses
If a partner leaves, you don’t want them taking clients, trade secrets, or business ideas with them. Including non-compete and confidentiality language keeps your business protected long after the partnership ends.
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Amendment Process
Your business will evolve, and so should your agreement. Make sure you include language about how to update or amend the contract as your needs change.
Custom Agreements Are Always Better Than Standard Forms
Sure, a free partnership agreement form can be a good starting point. But no standard form is a substitute for legal advice tailored to your business. Every partnership is unique. You deserve a contract that reflects your goals, risks, and operations—not a generic form someone downloaded online.
Work with a Legal Team That Gets It
At The Law Offices of Paul H. Appel, we know the ins and outs of partnership contracts, and we make sure no detail gets overlooked. With over 50 years of experience helping New Jersey business owners, we offer the kind of forward-thinking legal counsel that prevents problems before they start.
Whether you’re launching a new business or formalizing an existing partnership, we’re here to make sure your agreement is rock-solid. Contact us and let’s protect what you’re building—together.