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Partnership Agreements

A partnership in Houston is most generally defined as two or more people who are engaged in business in order to make a profit. A general partnership does not require either party to create a contract or file any business documents. However, if the partners create their partnership in this manner without a partnership agreement, all parties are equally liable on any action or decision a partner to the business may make. This means if one partner makes a poor decision on behalf of the partnership without the consent of the other partners, each party to the partnership is still liable for any repercussions or consequences.

Partnerships agreements are defined in Texas as any agreement between the partners concerning a partnership. Partnership agreements apply to the following forms of business entities:

  • General Partnerships
  • Limited Partnerships
  • Limited Liability Partnerships
  • Limited Liability Limited Partnerships

Corporations and Limited Liability Companies are governed by separate forms of agreements.

A partnership agreement can help resolve disputes and settle any conflict if they arise during the course of your business, including if a partner dies, if a partner divorces, if one of the partners becomes disabled, if one of the partners retires, if one of the partners wants to sell or go out of business, or if one of the partners files for bankruptcy. Therefore, it is important to create a partnership agreement that is in the best interest of all partners. Contact an experienced business law attorney in Houston to draft your most ideal business partnership agreement.

Houston Partnership Agreement Attorney

If you are considering drafting a partnership agreement in Houston, or any of the surrounding areas in Texas, including Spring, Humble, Tomball, Aldine, Atascocita, Klein, Jersey Village, The Woodlands, Conroe or Oak Ridge North, contact the law offices of Wilhite & Associates, P.C. The attorneys at Wilhite & Associates are experienced in drafting Texas business documents, including partnership agreements and will help you identify your best partnership agreement for your business venture. Call Wilhite & Associates at (281) 537-2171 about drafting your business partnership agreement.

Partnership Agreements in Houston

The partnership agreement governs the relations of the partners and between the partners and the partnership. No matter the type of partnership, the agreement should contain all of the following:

Name of the Partnership – One of the most important pieces of information the partnership agreement should contain is the business name. This is the name the business operates under and should be filed with the Secretary of State and assigned an identification number.

Contributions to the Partnership – Since financial and monetary issues generally create the most friction in a partnership, the partnership agreement should list and identify all property, cash and service contributions each partner will give to the partnership, in addition to the percentage each partner will contribute in each of these areas.

Allocation of Profits and Losses – The partnership agreement will identify which portion of profits and losses should be allocated to each partner. There are a variety of ways the profits and losses can be assigned to each partner, so it is essential to have the exact specifications and percentages listed in the partnership agreement. For example, profits and losses can be split equally among the partners or correlate to the proportion of money, property or services each partner contributed to the partnership. Additionally, it is important to include when the profits will be distributed to each partner. For example, the profits can be distributed on an annual, weekly, monthly or quarterly period.

Partners’ Authority and Decision Making – Generally, each partner is equally liable for any business dealings the other partner makes, even without the consent of other partners. However, partners can contract out of a partner’s authority or ability to make decisions in the partnership agreement, or by stating what each partner is permitted or not authorized to do.

Management Duties – The partnership agreement should also details some of the major duties each partner is required to do. For example, the partnership agreement can identify who will be in charge of accounting, who will deal with customer relations, who will be in charge of the daily business operations, who will manage employees, etc. However, there are certain duties the partners cannot contract out of, including the duties of loyalty, care and good faith.

Admitting New Partners – It is important for the partnership agreement to identify the procedure and permissibility for adding new partners to the partnership.

Withdrawal or Death of a Partner – The partnership agreement should identify what will happen to the business or to a partner’s ownership percentage upon the death of a partner, bankruptcy of a partner, divorce of a partner, or if a partner becomes disabled. This portion of the partnership agreement should also identify how a partnership can buy out another partner if this is an option the partners want to pursue.

Resolving Disputes – If the partners cannot agree on an issue that has not been specified in the partnership agreement, it is also important for the partners to identify how they will resolve the dispute. These options can include immediately getting involved in litigation or going to court, or seeking alternative dispute resolution, such as arbitration or mediation.

As each of these areas can be very difficult and complex to draft, it is important to hire an experienced business lawyer who will help you draft your ideal partnership agreement.

Effect of a Houston Partnership Agreement

According to the Tex. Bus. Org. Code § 152.002, a partnership agreement may not:

  • Unreasonably restrict a partner’s right of access to books and records;
  • Eliminate the duty of loyalty, except that the partners may identify specific types of activities or categories of activities that do not violate the duty of loyalty, if the categories are not unreasonable;
  • Eliminate the duty of care, except that the partners may determine these standards in the partnership agreement;
  • Eliminate the obligation of good faith, except that the partners may determine these standards in the partnership agreement;
  • Vary the power to withdraw as a partner, except that the notice be in writing;
  • Vary the right to permissibly expel a partner;
  • Restrict the rights of a third party, except for a limitation in an individual partner’s liability in a limited liability partnership;
  • Select a governing law not permitted; or
  • Waive or modify certain provisions, as provided by law, in a partnership agreement.

Wilhite & Associates, P.C. | Houston Partnership Agreement Lawyer

Contact Wilhite & Associates, P.C. today for a consultation about drafting your partnership agreement in Harris County in Texas. George W. Wilhite of Wilhite & Associates is an experienced Houston business law attorney who will strategically create a partnership agreement ideal for your business. Contact Wilhite & Associates, P.C. at (281) 537-2171 for a consultation about creating your business partnership agreement throughout Harris County, and the surrounding areas of Montgomery County, Washington County, Grimes County, Fort Bend County and Waller County.

Wilhite & Associates, P.C. represents clients from all over Southeast Texas, including:

Harris County - Aldine, Atascocita, Barrett, Barker, Baytown, Bellaire, Brownwood, Bunker Hill Village, Channelview, Clear Lake, Cloverleaf, Crosby, Cypress, Deer Park, East Houston, El Lago, Galena Park, Hedwig Village, Highlands, Hilshire Village, Houston, Hudson, Humble, Hunters Creek Village, Jacinto City, Jersey Village, Katy, Kingwood, Klein, La Porte, Louetta, Lynchburg, Nassau Bay, North Houston, Pasadena, Piney Point Village, Seabrook, Sheldon, Shoreacres, South Houston, Southside Place, Spring, Spring Valley, Taylor Lake Village, Tomball, Webster, West University Place

Montgomery County - Conroe, Cut and Shoot, Magnolia, Montgomery, Oak Ridge North, Panorama Village, Patton Village, Roman Forest, Shenandoah, Splendora, Stagecoach, Willis, Woodbranch, Woodloch, The Woodlands

Fort Bend County - Arcola, Beasley, Fairchilds, Fulshear, Kendleton, Meadows Place, Missouri City, Needville, Orchard, Pleak, Richmond, Rosenberg, Simonton, Stafford, Sugar Land, Thompsons

Waller County - Brookshire, Hempstead, Pattison, Pine Island, Prairie View, Waller

Grimes County - Anderson, Bedias, Iola, Navasota, Todd Mission

Washington County - Brenham, Burton, Chappell Hill

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