Articles of Partnership

26 06 2008

Articles of Partnership , according to Wikepedia, is a voluntary contract between two or among more than two persons to place their capital, labor, and skills, and corporation in business with the understanding that there will be a sharing of the profits and losses between/among partners

Principal Components of Articles of Partnership

There are many parts that should be included in any articles of partnership. These are:

  • Names of included parties – includes all names of people participating in this contract
  • Commencement of partnership– includes when the partnership should begin. The date of the contract is assumed as this date, if none is given.
  • Duration of partnership – includes how long the partnership should last. It is automatically assumed that the death of one of the contracting parties breaks the contract, unless otherwise stated.
  • Business to be done – includes exactly what will be done in this partnership. This section should be very particular to avoid confusion and loopholes.
  • Name of firm – includes the name of the business entity.
  • Initial investments – includes how much each partner will invest immediately or by installments.
  • Division of profits and losses – includes what percentages of profits and losses each partner will receive. If it is not a limited partnership, then there is unlimited liability (each partner is responsible for all partners’ debts, including their own).
  • Ending of the business – includes what happens when the business winds down. Usually this includes three parts: 1) All assets are turned into cash and divided among the members in a certain proportion; 2) one partner may purchase the others’ shares at their value; 3) all property is divided among the members in their proper proportions.
  • Date of writing – includes simply the date that the contract was written.

[edit] Common Components of Articles of Partnership

There are also multiple sections which are often included as well in articles of partnership, based on the circumstance. These are:

  • Leadership – includes the granting of one partner the rights to manage and administer the business or a specific department.
  • Majority management – includes the authorization of a majority of partners to manage the affairs of the entire partnership. This is particularly common where there are numerous partners.
  • Annual account – includes provisions to account for, annually, the property and debts of the business.
  • Consistent interest – includes the forbidding of any partner to carry out business unrelated to the partnership. This is usually implied in articles of partnership.
  • Misconduct expulsion – includes the allowance of expelling partners who commit gross misconduct or becomes insolvent, bankrupt, etc. This is particularly common where there are numerous partners.
  • Resolution of dispute – includes the submission of arguments to arbitration

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