The main importance are given below:
Avoid conflict
get it in writing
legally binding
Protect The Benefits
Introducing new partners and removing partners
Distribution of assets post-dissolution
Sharing profits/losses and interest on capital
Sharing profits/losses and interest on capital
because without one it is a matter of 'he said, she said" so to speak
I frankly am never in favor of partnerships
I worked for a man who was doing bookkeeping for a couple of partners and saw what that evolved into--not a pleasant thing
I also signed an agreement with someone I knew well(or so I thought) and in the end she wrote checks on the money we had(together) and that was the end of the partnership
it was not a huge amount certainly not worth taking to court but a bitter lesson learned along the way
6 marks? Out of 10? Or 100? Clarity can provide people with incentive to perform at higher standards, like provide you with better answers because of the importance of the question. A partnership agreement gives clarity by providing partnering entities, and your own business entity, with clear outputs to inputs, eg who gets what stuff for what work. This clarity allows managers to economically allocate resources and can provoke employee incentive. I'm sure you could go into more detail but these are the basics
Partnership Agreement is a document setting out the agreement of the partners on how the partnership is to be conducted.
It can be in oral or in written form. But written form is highly preferred as it avoids disputes later on.
When the partnership deed is silent i.e. It does not contain one or more clauses, then the Partnership Act comes into the scene and determines the profit-sharing ratio, rights and duties of partners....
So agreement regulates the relations between the partners....
