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Contract Knowledge Centre · Ownership
The agreement between people going into business together: contributions, decision-making, money out, and what happens when someone leaves.
Partnerships fail on the questions nobody wanted to raise at the start. An agreement is the record of those answers made while everyone was still reasonable.
What each clause is for, and what to look at in the wording you have been given.
Contributions
Records what each partner brings.
What to check: Cash, assets, time, IP and relationships - valued where possible.
Decision rights
Sets who decides what.
What to check: Which decisions need unanimity, and whether there is a way to break a deadlock.
Profit and drawings
Governs money out.
What to check: That salaries, drawings, expenses and reinvestment are all addressed.
Vesting and leavers
Protects those who stay.
What to check: Vesting schedule, cliff, and good and bad leaver treatment.
Transfer and valuation
Controls who can end up as your partner.
What to check: Pre-emption rights, and an agreed method for valuing a departing stake.
Death, incapacity and competition
Covers the events nobody plans for.
What to check: What happens to the stake, and what a leaver may do next.
Any one of these can have an innocent explanation. Ask for it before you sign.
When to speak to a lawyer