The Pennsylvania partnership agreement is a legal document that serves as the formalization of the agreement between two or more partners with the common goal of establishing a business partnership.
The partnership agreement, or partnership deed, usually includes information about the partners, their initial investment, and their management, voting, and profit-sharing rights based on their investment. This prevents potential misunderstandings and disputes between the partners in the future.
The partnership agreement is also referred to as the partnership contract or the articles of partnership.
Pennsylvania Partnership Agreement Types
In Pennsylvania, there are different types of partnership agreements that partners can choose from:
Types of Purchase Agreement
General Partnership (GP): It enables all partners to participate in the decision-making process. However, they all have unlimited liability for business operations with all of their personal assets. (Title 15, Chapter 84, § 8411 to § 8486)
Limited Partnership (LP): Here, the partnership is formed between one or more general partners, who have unlimited liability for the business operation and have decision-making powers, and one or more limited partners, who don’t have decision-making powers but have limited liability. (Title 15, Chapter 86, § 8611 to § 8695)
Limited Liability Partnership (LLP): With this type of partnership agreement, all partners have equal authority to make decisions, and they are not liable for their partners' negligence. (Title 15, Chapter 82, § 8201 to § 8244)
Pennsylvania Partnership Agreement Requirements
The Pennsylvania partnership agreement format should include the following
Details about the identity of the business partners
Information on what type of partnership is being established
Date of establishment of the business partnership
Information about the initial investment of each partner
Description of each partner's role in the partnership
Information about each partner’s management or voting rights
Details on how the profits are distributed between the partners
Rules on how the partners will cover eventual business losses