Free Partnership Agreement Generator
A partnership agreement is a legal contract between two or more business partners that defines ownership, profit-sharing, roles, and exit terms. Every partnership eventually disagrees — the purpose of this agreement is to make that disagreement a paperwork exercise instead of an existential one. This generator produces a two-partner agreement covering capital contributions, profit-sharing, roles, decision authority and, most importantly, how a partner exits and how disputes are resolved.
PARTNERSHIP AGREEMENT
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Updates as you typePARTNERSHIP AGREEMENT
Legal Disclaimer: This document is a general template and does not constitute legal advice. Consult a qualified attorney for advice specific to your situation and jurisdiction.
Effective Date: 2026-09-08
This Partnership Agreement is entered into between [Partner A] and [Partner B] (collectively, the "Partners") for the purpose of carrying on business under the name [Business Name] (the "Partnership").
WHEREAS the Partners wish to associate as general partners for the operation of a business enterprise;
NOW, THEREFORE, in consideration of the mutual covenants herein, the Partners agree as follows:
1. Formation and Name
The Partners hereby form a general partnership under the name [Business Name], effective from the date first written above.
2. Capital Contributions
Each Partner shall contribute capital to the Partnership as follows:
- [Partner A]: [amount]
- [Partner B]: [amount]
3. Profit and Loss Sharing
Net profits and losses of the Partnership shall be allocated between the Partners in the following ratio: [A] — 50%, [B] — 50%. Distributions shall be made from available cash after providing for reasonable working capital needs.
4. Roles and Responsibilities
[Partner A]: —
[Partner B]: —
5. Decision Making
Decisions in the ordinary course of business may be taken by either Partner. Decisions outside the ordinary course — including admission of new partners, incurring debt above a mutually agreed threshold, sale of substantial assets, or dissolution — require the unanimous written consent of both Partners.
6. Banking and Accounts
The Partnership shall maintain one or more bank accounts in its name. All Partnership funds shall be deposited to such accounts. Withdrawals shall require the signature of either Partner up to a mutually agreed limit and both Partners above that limit.
7. Books and Records
The Partnership shall keep accurate books of account, which shall be open to inspection by either Partner at all reasonable times. Financial statements shall be prepared at the end of each fiscal year.
8. Dispute Resolution
Any dispute arising out of this Agreement shall first be resolved through good-faith negotiation, then mediation, then arbitration. Only if such efforts fail may either Partner initiate legal proceedings.
9. Withdrawal and Dissolution
A Partner may withdraw upon 90 days written notice. Upon withdrawal, death, or bankruptcy of a Partner, the remaining Partner shall have the right of first refusal to purchase the withdrawing Partner's interest at fair market value. Failing agreement on value, an independent valuer shall be appointed.
10. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of California, USA.
Governed by the laws of California, USA.
Signed and Agreed
Legal Disclaimer: This document is a general template and does not constitute legal advice. Consult a qualified attorney for advice specific to your situation and jurisdiction.
What the Partnership Agreement Generator does
A partnership agreement is a contract between two or more co-owners of a business that fixes capital contributions, profit-sharing ratios, decision authority and the process for a partner to exit.
Methodology and formula
Clause anatomy: Partner Names and Business Name -> Capital Contributions -> Profit/Loss Sharing Ratio (distinct from ownership %) -> Roles and Decision Authority -> Admission of New Partners -> Exit/Buy-out Valuation Method -> Dispute Resolution Ladder (negotiation to mediation to arbitration) -> Dissolution Terms -> Signatures.
Worked example
- Inputs
- General partnership between Arjun Mehta and Lena Fischer trading as Meridian Consulting, capital split 60/40, profit share 55/45 reflecting Arjun's client-acquisition role, governing law India, registered under the Partnership Act 1932.
- Result
- Agreement fixing 60/40 ownership but 55/45 profit split, buy-out clause valuing a departing partner's share at book value plus 2x average annual profit, mediation-first dispute clause before arbitration in Mumbai.
Ownership and profit share are deliberately different numbers here because Arjun contributes more capital but Lena delivers more billable hours — writing both down separately avoids the common 18-month-in resentment over who 'really' earns their share.
When to use this tool
Use a Partnership Agreement when two or more people co-own and jointly run a business. If one party is simply supplying services or goods to the other rather than co-owning the venture, a Service Agreement or Vendor Agreement is the correct document instead.
About the Partnership Agreement Generator
Write it before the money starts flowing
The single most common cause of partnership disputes turning ugly is signing the agreement after the business becomes valuable. When there's nothing to fight about, terms are easy to agree; once revenue is real, every clause becomes a negotiation with different incentives on each side. Sign the agreement in month one, even if the terms feel premature. Partners who insist "we'll figure it out when we need to" are the partners you eventually litigate against.
Equal ownership doesn't mean equal profit split
Two 50/50 partners can still split profit 60/40 based on capital contributed, hours worked, or accounts owned. Ownership decides voting and equity on exit; profit share decides who gets paid what today. Confusing the two is a leading cause of resentment 18 months in — "I own half the business but you take home 70% of the money." Write both numbers down explicitly.
The exit clause is the whole document
Buy-out valuation method, notice period, non-compete scope, treatment of client accounts on departure, and dispute-resolution ladder (negotiation to mediation to arbitration or court) all belong here. The template defaults to mediation before arbitration because mediation costs a few thousand and preserves the relationship — going straight to court destroys both the money and the relationship. Ninety percent of partnership breakups settle in mediation when there's a document telling them to try mediation first.
Frequently asked questions
Do I need to register the partnership?
Can this be used for more than two partners?
Is this the same as an LLP agreement?
What happens if one partner dies or wants out?
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