Articles of partnership is a voluntary
contract
A contract is an agreement that specifies certain legally enforceable rights and obligations pertaining to two or more parties. A contract typically involves consent to transfer of goods, services, money, or promise to transfer any of thos ...
between/among two or more persons to place their
capital
Capital and its variations may refer to:
Common uses
* Capital city, a municipality of primary status
** Capital region, a metropolitan region containing the capital
** List of national capitals
* Capital letter, an upper-case letter
Econom ...
, labor, and skills into a business, with the understanding that there will be a sharing of the profits and losses between/among partners. Outside of North America, it is normally referred to simply as a partnership agreement.
A partnership agreement is a written and legal agreement between/among business partners. It is always recommended but not essential for partners to have such an agreement.
Articles of partnership
Multiple sections are often included in articles of partnership, based on the circumstances:
* the granting of the partner the rights to manage and administer the business or a specific department.
* the authorization of a majority of partners to manage the affairs of the entire partnership. This is particularly common where there are numerous partners.
* provisions to account for, annually, the property and debts of the business.
* the forbidding of any partner to carry out business unrelated to the partnership. This is usually implied in articles of partnership.
* the allowance of expelling partners who commit gross misconduct or become
insolvent
In accounting, insolvency is the state of being unable to pay the debts, by a person or company ( debtor), at maturity; those in a state of insolvency are said to be ''insolvent''. There are two forms: cash-flow insolvency and balance-sheet in ...
,
bankrupt
Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the de ...
, etc. This is particularly common where there are numerous partners.
* the submission of arguments to
arbitration
Arbitration is a formal method of dispute resolution involving a third party neutral who makes a binding decision. The third party neutral (the 'arbitrator', 'arbiter' or 'arbitral tribunal') renders the decision in the form of an 'arbitrati ...
.
* the allocation of business income and losses among partners.
See also
*
General partnership
References
{{Reflist
Business law
Legal documents
Partnerships