Event Partnership Agreement: Everything You Need to Know
An event partnership agreement is a written agreement between two or more people for the establishment of a partnership. Particularly, a partnership is a legal structure where two or more people own and operate a business.3 min read
An event partnership agreement is a written agreement between two or more people for the establishment of a partnership. Particularly, a partnership is a legal structure where two or more people own and operate a business. The partners will generally share responsibility for overseeing and managing the business, while also sharing profits.
Importance of a Partnership Agreement
When there is more than one person running a business, conflicts can arise, which is why it is important to draft a written event partnership agreement. Such events in a partnership could include processes for transfer of ownership, sharing of profits, entering into contracts, and dissolution of the partnership. Therefore, while not required, it is highly advisable and beneficial to create such a written agreement.
The clearer the agreement, the fewer issues between the parties, since they will have to abide by the agreement if any potential issues arise during the partnership’s existence.
While there are several steps that need to be taken when writing the agreement, there are also some other enjoyable aspects of creating the partnership. This includes:
- Finding a business name and logo
- Identifying what types of products or services you will sell
- Obtaining financing to help get your business on the right track
- Coming up with new goals and objectives for your partnership
Drafting the Partnership Agreement
Drafting the partnership agreement, also referred to as the operating agreement, can be a multi-step process. This document will become legally binding after signed by all partners and will be utilized in the event that a legal suit arises among partners.
Some important aspects of the operating agreement include the following:
- Responsibilities of each partner
- How the company will be managed
- How voting rights will be handled among members, particularly for those partnerships with more than two owners
- How the partners will share in the profits, i.e., percentage of ownership
- How a partner can sell his ownership rights to someone else and the process for doing so
- What happens if one of the partners dies or becomes incapacitated
- How to dissolve the partnership
While not all states require an operating agreement, some states do in fact require this. Therefore, before you choose not to draft one, visit the Secretary of State’s website to find out if you are legally required to have one.
If you are unsure as to whether or not you need to hire a lawyer in order to draft such an agreement, the short answer here is no. However, if you feel as though you could use the legal assistance, then you can speak to a qualified lawyer who can help you and the other partners draft a proper operating agreement.
Clauses for a Partnership Agreement
There are some clauses that are beneficial to include in the operating agreement; these include:
- Decision-making clause
- Capital contribution clause
The decision-making clause is helpful, as it will identify how decisions will be made and what partners might have seniority over other partners to make or alter such decision-making processes.
Similarly, a capital contribution clause is helpful since it will identify how much money each partner has contributed to the partnership. While this might identify how much ownership each partner has, it doesn’t necessarily equate to ownership percentages. For example, assume that John, Mary, and Rose entered into a general partnership. They contributed 25 percent, 30 percent, and 45 percent respectively. Ordinarily, this means that John has 25 percent ownership, Mary has 30 percent ownership, and Rose has 45 percent ownership over the partnership’s assets. However, the operating agreement can provide that they all share equally in the assets of the business, or alternatively, the percentage can be altered in any way they agree upon.
When it comes to salaries and distribution payments, the partners should include this clause, which will specify how much money each partner is paid and when distribution payments or bonuses can be paid to each partner. This could be helpful for limited partnerships, where one partner is a general partner, and the other is a limited partner. The limited partner will usually be the person contributing financially to the company but has no management authority. The general partner, however, will have daily oversight into the business’s operations. Therefore, the general partner will likely be given a higher salary than the limited partner. Such salaries will be agreed upon between partners.
If you need help learning more about an event partnership agreement, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.