What should be in a business partnership agreement?

Going into business with a partner is often compared to a marriage. And like many marriages, business partnerships can end in divorce.

Without a written Partnership Agreement, your business is governed by the Partnership Act 1891 (Qld), which contains default rules that may not suit your needs (e.g., that all partners share profits equally, regardless of effort).¹

Key Clauses to Include

To protect your investment and friendship, your agreement should cover:

1. Contributions & Ownership

• How much capital is each partner putting in?
• What happens if the business needs more money later? (Cash calls).

2. Decision Making

• Who handles the day-to-day?
• Do you need a unanimous vote for big purchases (e.g., over $10k)?

3. Profit Distribution

• Are profits split 50/50? Or based on hours worked?
• Can partners draw a salary before profits are calculated?

4. Dispute Resolution

• If you deadlock 50/50 on a decision, how do you break the tie? (e.g., appointing an independent mediator).

5. Exit Strategy (The “Pre-Nup”)

• Retirement: If one partner wants out, does the other have the “first right of refusal” to buy their share?
• Valuation: How will the business be valued? (Crucial to agree on a formula before the fight starts).
• Death: What happens if a partner dies? (Do you want to be in business with their spouse?).

Related Topics

• Pty Ltd vs Sole Trader
• Directors Duties
• Commercial Law Practice Area

Review Your Structure

A simple agreement now can save massive legal costs later. Bell & Senior drafts tailored commercial agreements for QLD businesses.

Starting a partnership? Contact us for a quote. Call (07) 5532 8777.