Partnership resolution definition refers to resolving a dispute between partners in a business partnership. The way certain disputes in partnership will be handled should be spelled out in the partnership agreement.
A partnership agreement is a document that outlines the obligations, requirements, and expectations of business partners. When entrepreneurs form a partnership they should create a partnership agreement to be signed by all parties involved.
This document should be as thorough as possible covering many different scenarios. Consider the different situations that are likely to arise during the lifespan of the company. It is always a good idea to enlist the help of a business formation lawyer when drafting such important documents.
The Uniform Partnership Act was designed to guide partnership through the dissolution process in case they did not form a partnership agreement. Certain states also have laws in place to guide businesses in such situations. Even though there are laws and guidelines in place already, it's still better to formulate your own documents.
A well-written partnership agreement should include the following information:
Every partnership agreement should include a buy-sell agreement. This portion of the document will lay out exactly how partners should handle the death, disability, retirement, or divorce of another partner. In the case that a partner leaves the business for any reason, can the remaining partners buy back their shares?
This may not seem like a crucial question, but it certainly can become one when unexpected events occur. For example, what if a partner dies and their next of kin automatically takes over their ownership in the business? What if this person's views for the partnership don't align with the views of the remaining partners? Being able to buy back those shares could prevent a seriously expensive dispute. This is called a cross-purchase agreement.
A stock-redemption agreement takes place when a company buys the shares of a departed partner instead of the remaining partners. This means that those shares can then be resold to other investors or partners.
Buy-sell agreements are quite simple when a partnership is only made up of two partners, but things get more complicated when several shareholders or owners are involved.
Partnership disputes can arise from many different situations. Even the most successful businesses can encounter disputes. Whether partners are disagreeing on their visions for the future of the company or a new individual wants to join the company, a partnership agreement is essential to keeping the business healthy and thriving through such disputes.
Frequently, partnerships are created between friends and family members with a past together, so disputes can end up being very upsetting and even emotional.
To be sure that a partnership agreement covers all of the necessary bases, a business attorney can look it over and offer advice.
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