Question About Partnership Agreement
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gabbie
Apprentice
Joined: 22 Aug 2006
Posts: 7
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 Posted: 11/07/07 - 05:44 Post subject: |
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| I have started a business with a partner. Now I am drafting a basic partnership agreement that include a death clause. It says that in case of death to a partner, the remaining partner has the first right to purchase the partner's share at fair market value. That is instead of allowing the partners share to be bequeathed to a third party. Is there a "standard" clause to handle this situation? Is it typical that a partnership agreement would include this component? |
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neville
Apprentice
Joined: 17 Mar 2004
Posts: 3
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| Posted: 12/07/07 - 00:19 Post subject: |
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| When I started my business, I had three other partners. Less than six months later, it was just me and one other partner. Without our shareholders agreement, we would have been in a real mess. I worked almost three straight months developing the agreement by myself, and finally had a lawyer review at the end. As far as a standard clause for "death of a partner" goes, I think the estate of the partner (usually his family) gets his shares. I would recommend protecting yourself with either a corporation status or an LLC. You need some protection. This partner of yours may be your best friend in the world, but money does strange things to people. Layout the rules ahead of time to avoid future battles. |
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