The New Jersey partnership agreement is a legal document that defines all the details of how the partners will operate within their business entity. It defines their initial investment, rights, and duties inside the business partnership.
The partnership agreement, or partnership deed, is often used in the process of business expansion or in case the partnership wants to apply for a loan from a certain financial institution.
Third parties will often require the partners to submit the partnership agreement so they can learn how the business partnership is organized and make their decision based on the information presented in the partnership agreement.
The partnership agreement is also called the partnership contract or the articles of partnership.
New Jersey Partnership Agreement Types
This section provides different types of partnership agreements that can be used in New Jersey:
Types of Partnership Agreement
General Partnership (GP): This type of partnership enables all partners to participate in the decision-making process. However, they all have unlimited liability for the business operation with all of their personal assets. (Section 42:1A-1 to 1A-56)
Limited Partnership (LP): Here, the partnership is formed between the general partners, who have decision-making powers and have unlimited liability for the operation of the partnership, and the limited partners, who don’t have decision-making powers but have limited liability for the partnership. (Section 42:2A-1 to 2A-73)
Limited Liability Partnership (LLP): This type of partnership agreement enables all partners to have equal decision-making powers, and they are not liable for the damages caused by the negligence and actions of other partners. (Section 42:1A-47)
New Jersey Partnership Agreement Requirements
In New Jersey, the partnership agreement format will include the following elements:
Names and mailing addresses of the partners
Name and registered address of the partnership
Date of partnership formation
Details about each partner’s contribution to the partnership
Information about each partner’s management rights
Rules on profit distribution
Information about the accounts of the partnership
Conditions that must be fulfilled before the eventual partnership expansion
Rules on how the partners will cover eventual losses