Partnership Agreements

Entering a business partnership is an exciting step, whether you are launching a new venture or expanding an existing one. However, even when partners completely trust each other, misunderstandings, financial disagreements, and unexpected issues can arise. A Partnership Agreement is the legal foundation that provides clarity, structure, and protection for all partners involved.

At Ace Law, attorney Kevin Acevedo helps business partners draft, review, negotiate, and enforce Partnership Agreements that safeguard their rights and support long-term success.

What Is a Partnership Agreement?

A Partnership Agreement is a legally binding contract between two or more individuals or entities who agree to operate a business together. It outlines the responsibilities, ownership interests, financial obligations, and operational rules of the partnership.

A well-drafted Partnership Agreement defines:

• How decisions will be made
• How profits and losses will be shared
• What happens if a partner leaves
• Each partner’s responsibilities
• How disputes will be resolved
• Rules for adding new partners
• Protection against liability

Without a clear agreement in place, partners may face serious legal and financial risks, especially during disagreements or major changes in the business.

Types of Partnerships

Business partnerships can take several forms, and each may require different legal structures:

1. General Partnerships (GP)

All partners share equal responsibility for managing the business and for any debts or liabilities. A detailed agreement is essential to protect each partner’s interests.

2. Limited Partnerships (LP)

One or more general partners manage the business, while limited partners contribute capital but do not participate in daily operations. The agreement must clarify each partner’s role and liability limits.

3. Limited Liability Partnerships (LLP)

Partners have liability protection from certain business obligations. Common among professionals like lawyers, accountants, and architects.

4. Limited Liability Limited Partnerships (LLLP)

A hybrid structure where both general and limited partners have liability protection.

Each structure has different tax, liability, and operational implications, making legal guidance essential.

Why a Partnership Agreement Is Crucial

Even when partners are family or close friends, a formal agreement helps prevent misunderstandings. Without a written contract, state default laws may determine how disputes are handled—often resulting in decisions that neither partner wants.

A Partnership Agreement provides:

• Clear expectations
• Financial transparency
• Defined responsibilities
• A plan for unexpected circumstances
• Protection for all partners

This allows the partnership to operate smoothly and reduces the risk of conflict.

Key Elements of a Strong Partnership Agreement

1. Ownership and Capital Contributions

The agreement should specify:

• Each partner’s ownership percentage
• Initial capital contributions
• Rules for additional contributions
• How ownership changes will be handled

Clear ownership terms help prevent disputes later.

2. Profit and Loss Distribution

Profits and losses can be distributed:

• Equally
• Based on ownership percentage
• Based on performance or responsibilities

The agreement must clarify how distributions will occur and when.

3. Roles, Duties, and Responsibilities

To avoid confusion, the agreement outlines:

• Each partner’s role
• Decision-making authority
• Management responsibilities
• Operational duties

This ensures efficient business operations.

4. Decision-Making Procedures

The agreement identifies how major decisions will be made:

• Unanimous votes
• Majority votes
• Weighted votes based on ownership

Specific procedures are crucial for preventing deadlocks.

5. Partner Withdrawal or Removal

A partnership may change over time. The agreement should describe:

• What happens if a partner wants to leave
• Conditions for removing a partner
• Buyout procedures
• Valuation methods for ownership shares

Planning ahead avoids conflict during transitions.

6. Dispute Resolution

Even well-structured partnerships may face disagreements.
The agreement may include:

• Mediation requirements
• Arbitration clauses
• Litigation guidelines

Clear procedures help resolve conflicts efficiently.

7. Dissolution of the Partnership

If the partners choose to end the business, the agreement defines:

• Dissolution triggers
• Winding-up procedures
• Distribution of assets and liabilities

This ensures the business closes legally and fairly.

Legal Risks of Not Having a Partnership Agreement

Without a properly drafted agreement, partners may face:

• Disputes over money
• Conflict over responsibilities
• Exposure to unexpected liabilities
• Difficulty removing underperforming partners
• Potential lawsuits
• Business disruption or failure

A Partnership Agreement is an investment in the stability and longevity of the business.

How Ace Law Helps With Partnership Agreements

Attorney Kevin Acevedo at Ace Law provides personalized legal guidance for business partners at all stages. His services include:

For New Partnerships

• Drafting Partnership Agreements
• Advising on business structures
• Creating liability and tax strategies
• Filing necessary state documents

For Existing Partnerships

• Reviewing or updating outdated agreements
• Negotiating new terms
• Adding or removing partners
• Resolving partnership disputes

For Disputes or Litigation

• Representing partners in conflicts
• Enforcing contract provisions
• Protecting financial and legal interests

Kevin Acevedo ensures that every agreement is tailored, legally sound, and built to support long-term success.

Conclusion: Protect Your Business With Ace Law

A strong Partnership Agreement is essential for a stable, successful, and conflict-free business relationship. Whether you are launching a new venture or updating an existing partnership, legal guidance ensures that your rights, investments, and responsibilities are fully protected. At Ace Law, attorney Kevin Acevedo provides clear, strategic, and comprehensive legal support for business partners across Texas. He works closely with clients to draft and review Partnership Agreements that reflect their goals and protect their interests.

If you are forming a partnership, modifying an agreement, or facing a dispute, Kevin Acevedo at Ace Law is ready to help you build a secure and legally protected business foundation.