No Agreement Is Necessary To Form A Partnership

A partnership is a business form that is created automatically when two or more people are beneficiaries of a business. Consider the language of the Uniform Partnership Act: “The combination of two or more people who continue to co-own a beneficial business forms a partnership, whether or not individuals intend to form a partnership.” A partnership – in its various forms – offers its multiple owners the flexibility and relative simplicity of organization and use. For limited partnerships, a partnership may even offer some liability protection. A partnership agreement will establish the internal management rules for the partnership. It cannot establish rules on the relationship between the partnership and third parties. The agreement itself is a contract and should follow the principles and rules set out in Chapter 8 “Introduction to Contract Law” by Chapter 16 “Corrective Measures.” Since the relationships of partners with themselves and their activities must be defined, each partnership agreement should clearly define the following conditions: (1) the name under which the partners will do business; (2) the names of the partners; (3) the nature, extent and location of the business; (4) each partner`s capital contributions; (5) how to distribute profits and losses; 6. how wages should be determined, if any; (7) each partner`s responsibilities in running the business; (8) restrictions on the power of each partner to hire it; (9) the method by which a partner can withdraw from the partnership; (10) The continuity of the business in the event of the death of a partner and the formula for paying a quota to its heirs; and (11) resolution method. An agent may, through his actions in the name of a partnership, link a partnership to contracts and other obligations. Of course, when an agent acts on behalf of a partnership or other company, the company is bound by the actions and decisions of that representative. A third party dealing with an agent of a company can rely on the agency relationship and enforce the commitments made by the agent, even if the agent has made a stupid or selfish decision on behalf of the company. If the officer acts within his authority, the partnership will be bound by the acts, regardless of his or her conflict.

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