When Illinois partners join forces to start a business, they may feel everything is lining up in their favor. Typically, at the beginning of a business relationship, everything goes smoothly. The partners may have similar goals and follow similar paths to achieve them. However, as the business progresses, there are bound to be disagreements, confusion or challenges that can bring tension to the partnership. To avoid having those challenges result in an irrevocable rift that can signal the end of the business, partners are wise to establish firm and legally binding partnership agreements.
For the most part, a partnership agreement answers questions before they are asked. For example, how will the roles in the business be divided? How will the partners divide potential liabilities, and will the business invite additional people to become partners? Business owners may also want to set boundaries for noncompete and confidentiality agreements. A partnership contract foresees these questions and establishes the answers at a time when heads are cool and stress is low.
One of the most difficult and common questions partners may face is how to settle disputes. While minor disagreements may be quickly settled, partners may find themselves in the midst of a conflict that could mean the demise of their business. A partnership agreement can determine the best method for addressing this kind of problem, whether through arbitration, mediation or direct negotiation.
Much like a prenuptial agreement, a partnership contract prepares Illinois business owners for contingencies that may never occur while providing guidelines for day-to-day business transactions. In the event a dispute should arise between partners, each party will want to be confident that the contract protects his or her rights. This is why having partnership agreements drafted and executed with the assistance of an attorney is a wise decision.
Source: thebalance.com, “Why Your Partnership Needs a Written Agreement“, Jean Murray, Nov. 16, 2017