What needs to be in an agreement

source: http://investinginproperties.com.au/

Any partnership, no matter how small or large, and no matter who it is between, must have an agreement that covers the interest of both parties.

It is best to have a solicitor draw up an agreement for you. When considering what needs to be in the agreement, work out the absolute worst case scenarios for all parties, and make sure those issues are covered.
Some partnerships are between friends or family. Regardless, remember that your relationship with your partner may be in jeopardy if something goes wrong, so it is important to cover everything you possibly can in the agreement.

Here are some of the areas that need to be covered.

Firstly, the agreement needs to state clearly who is involved – this could be individuals, or entities such as trusts or companies.

Make sure the agreement is dated, and beginning and end dates are clearly stated. If you are unsure of how long the partnership will take, cover this so that all partners are clear.

Remember that circumstances can change very quickly, so cover the possibility of someone needing to end the agreement quickly. How will this happen, what period of notice needs to be given, how will the partner be compensated.

The agreement needs to clearly state the terms of the partnership. If the partnership involves money, profit shares, bonuses or interest payments, make sure these are clearly stated with no room for misunderstanding.

You may be part of a partnership that involves something other than money – for example, knowledge, skills or time. Again, make sure that the terms of this agreement is clearly stated.

The agreement is a legal document, and therefore must be executed in a legal format. It will need to be witnessed and signed by all parties. Depending on the law, you may need to have a Justice of the Peace certify the document, and, in some cases, you may need to lodge the documents with some authority.

Agreements also need to be in place for when the partnership is dissolved. Make sure that all parties are released in writing from the partnership, and that all obligations of the partnership are met. Have each party sign off on the partnership.

There are many other areas that could be added to an agreement. The main consideration, however, is to make sure that you have covered all possible scenarios, and that you have a legal document drawn up for you covering all parties.