From a technical perspective, a partnership agreement is the “internal constitution” of your business. In New Jersey, while oral partnerships can legally exist, they are highly vulnerable. A written agreement is a technical necessity to override statutory “gap fillers” that might otherwise disadvantage you.

Overriding Statutory Defaults

Without a custom agreement, New Jersey law imposes several default conditions that can be problematic:

• Equal Profit Sharing: Regardless of who contributed more capital or who does more work, the law assumes equal splits unless documented otherwise.

• Unlimited Personal Liability: In a general partnership, each partner is personally liable for the debts and the actions of the other partners.

• Management Deadlocks: Default rules often require unanimous or majority consent for “ordinary” business decisions, which can paralyze a company in Edison or Woodbridge if partners disagree.

Technical Elements of a Robust Agreement

We ensure your partnership formation agreement includes technical safeguards such as:

• Capital Contribution Provisions: Defining exactly what cash, property, or services each partner is providing.

• Fiduciary Duty Customization: Clarifying the duties of loyalty and care within the bounds permitted by N.J.S.A. 42:1A-4.

• Buy-Sell Provisions: Establishing a “business pre-nuptial” that determines how a partner’s interest is valued and sold upon death, disability, or retirement.