Partnership Agreement - Template, Sample Form Online Pro · EN-CA-law
✓ Valid in Canada (English) · drafted to comply with local law
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PARTNERSHIP AGREEMENT
(________)
This Partnership Agreement (the "Agreement") is made and entered into as of ________ (the "Effective Date"), by and between the following parties:
________, of the following address:
________
and
________, of the following address:
________
(collectively the "Partners" and each of them a "Partner").
WHEREAS the Partners intend to carry on business in common with a view to profit and to form a general partnership;
AND WHEREAS the Partners wish to associate themselves as partners in business and to set out the terms and conditions that govern the partnership;
NOW THEREFORE, in consideration of the premises and the mutual covenants contained herein, and for other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged), the Partners agree as follows:
1. Partnership
1.1. The Partners hereby agree to associate themselves in a general partnership (the "Partnership") and to carry on business in common with a view to profit in accordance with the laws of the Province of ________, including the Partnership Act applicable in that Province (the "Act").
1.2. The rights and obligations of the Partners are governed by this Agreement, and to the extent any matter is not addressed herein, by the Act.
2. Name and Registration
2.1. The firm name of the Partnership will be: ________, or such other name as the Partners may from time to time unanimously agree.
2.2. The Partners will cause the Partnership to be registered under any applicable business names or partnership registration statute of the Province of ________, and will maintain such registration in good standing.
3. Purpose
The purpose of the Partnership will be the following:
________
and any other lawful business activity incidental thereto as the Partners may unanimously determine.
4. Term
The Partnership will commence on ________ and will continue until terminated, dissolved, or wound up in accordance with the provisions of this Agreement.
5. Place of Business
The principal place of business of the Partnership will be located at ________, or such other location(s) as the Partners may designate from time to time.
6. Capital Contributions
6.1. Each of the Partners has contributed, or agrees to contribute, to the capital of the Partnership, in cash, property, or services represented at fair market value, as follows (the "Capital Contribution"):
6.1.1. ________: $________ (________)
6.1.2. ________: $________ (________)
6.2. All Capital Contributions will be made in full and on time, no later than ________.
6.3. No Capital Contribution may be withdrawn except with the unanimous written consent of all Partners.
7. Additional Capital
7.2. Any advance of money to the Partnership by any Partner in excess of the amounts provided for in this Agreement, or subsequently agreed to as an additional Capital Contribution, will be deemed a debt owed by the Partnership and not an increase in the Capital Contribution of that Partner. Such debt will be repaid with interest at such rate and at such times as may be determined by a majority of the Partners, within the limits permitted by law. Such advance will not entitle the lending Partner to any increased share of the Partnership's profits nor to any greater voting power. Such debts may have preference or priority over other payments to Partners as may be determined by a majority of the Partners.
8. Capital Accounts
An individual capital account (each a "Capital Account") will be maintained for each Partner, and their initial Capital Contribution will be credited to that account. Any additional Capital Contribution made by any Partner will be credited to that Partner's Capital Account.
9. Interest on Capital
No interest will accrue or be payable to any Partner on their Capital Contribution, inclusive of any agreed additional Capital Contributions.
10. Financial Decisions
Decisions regarding the distribution of profits, allocation of losses, the requirement for additional Capital Contributions, and all other material financial matters will be decided by a unanimous vote of the Partners.
11. Ownership Interest
The Partners' ownership interest in the Partnership will be as follows:
I. ________: ________%
II. ________: ________%
12. Profit and Loss
12.1. Subject to the other provisions of this Agreement, the net profits and losses of the Partnership, for both accounting and tax purposes, will accrue to and be borne by the Partners in proportion to their respective ownership interests as set out in Section 11 (the "Profit and Loss Distribution").
12.2. The Partnership will account for its profits and losses through an accountant to be appointed by the Partners.
12.3. Profits and losses will be distributed or allocated to the Partners annually, unless otherwise agreed.
12.4. Each Partner will be responsible for their own taxes payable in respect of any distribution made to them.
12.5. Partners may receive compensation from the Partnership, and the classification of such compensation will be determined in consultation with the Partnership's accountant. Any compensation arrangement will at all times comply with the Income Tax Act (Canada) and applicable provincial tax legislation.
13. Voting
In any vote required by the Partnership, each Partner will be entitled to one vote of equal weight, unless this Agreement expressly provides otherwise.
14. Accounting
Accurate and complete books of account of the transactions of the Partnership will be kept in accordance with generally accepted accounting principles (GAAP) and, at all reasonable times, will be available and open to inspection and examination by any Partner. The books and records of the Partnership will reflect all of the Partnership's transactions and will be appropriate and adequate for the business conducted by the Partnership. The fiscal year of the Partnership will end on ________ of each year.
15. Annual Report
As soon as practicable after the close of each fiscal year, the Partnership will furnish to each Partner an annual report showing a full and complete account of the condition of the Partnership. This report will consist of at least the following:
a) a statement of all information necessary for the preparation of each Partner's income or other tax returns;
b) a copy of the Partnership Information Return (where applicable) and any other returns filed with the Canada Revenue Agency for that fiscal year;
c) supporting income statements;
d) a balance sheet;
e) a cash flow statement;
f) a breakdown of the profit and loss attributable to each Partner; and
g) any additional information that the Partners may reasonably require.
16. Banking and Partnership Funds
The funds of the Partnership will be placed in such investments and banking accounts as the Partners may designate. All withdrawals from these accounts will be made by the duly authorized agent or agents of the Partners as agreed by unanimous vote of the Partners. Partnership funds will be held in the name of the Partnership and will not be commingled with those of any other person or entity.
17. Management
17.1. All the Partners will be consulted and their advice and opinions obtained as far as is practicable. However, the Managing Partner will have management and control of the day-to-day business of the Partnership for the purposes stated in this Agreement. All matters outside the day-to-day business of the Partnership will be decided by a unanimous vote of the Partners.
17.2. The following Partner will serve as the Managing Partner: ________. The term "Managing Partner" includes any Partner subsequently appointed to that role.
17.3. In addition to day-to-day management tasks, the Managing Partner's duties include keeping, or causing to be kept, full and accurate business records for the Partnership in accordance with generally accepted accounting principles (GAAP), and overseeing the preparation of any reports reasonably necessary to keep the Partners informed of the business performance of the Partnership.
17.4. A Managing Partner may voluntarily withdraw from the position of Managing Partner or may be replaced by a unanimous vote of the remaining Partners. Upon the withdrawal or removal of the Managing Partner from that position or from the Partnership, the remaining Partners will have equal rights in the management of the Partnership unless and until they appoint a successor Managing Partner.
17.5. The Managing Partner will not be liable to the remaining Partners for any action or failure to act resulting in loss or harm to the Partnership except in the case of gross negligence, willful misconduct, or breach of fiduciary duty.
17.6. The Managing Partner is authorized to retain or otherwise secure or enter into contracts with persons or firms as may from time to time be required in the management of the Partnership's business, including, without limitation, arrangements with sales companies, lawyers, accountants, brokers, advertisers, and insurers.
18. Authority to Bind
Subject to the restrictions in this Agreement, each Partner is an agent of the Partnership for the purpose of its business and has authority to bind the Partnership in matters within the ordinary course of the Partnership's business.
19. Compensation for Services Rendered
Partners may be compensated for services actually rendered, as may be agreed from time to time by majority vote of the Partners.
20. Tax Matters Partner
20.1. The following Partner will serve as the tax matters Partner: ________. The tax matters Partner will prepare, or cause to be prepared, all tax returns and reports for the Partnership and will make any related elections that the Partners deem advisable, in compliance with the Income Tax Act (Canada).
20.2. A tax matters Partner may voluntarily withdraw from the position or may be appointed or replaced by a majority vote of the other Partners. Upon the withdrawal of the tax matters Partner from the Partnership, the remaining Partners will appoint a successor as soon as practicable.
21. Meetings
21.1. Regular meetings of the Partners will be held annually, unless otherwise agreed.
21.2. Any Partner may call a special meeting to resolve issues that require a vote, as indicated by this Agreement, by providing all Partners with reasonable notice. A special meeting will be restricted to the specific purpose for which it was called.
21.3. All meetings will be held at a time and place that is reasonable, convenient, and practical considering the circumstances of all Partners, and may be held by telephone or electronic means.
22. Admitting a New Partner
22.1. A new Partner may be admitted to the Partnership with a unanimous vote of the existing Partners.
22.2. Any new Partner agrees to be bound by all the covenants, terms, and conditions of this Agreement, inclusive of all current and future amendments, and will execute such documents as are needed to effect the admission of the new Partner. Any new Partner will receive such business interest in the Partnership as determined by unanimous decision of the existing Partners.
23. Voluntary Withdrawal of a Partner
23.1. Any Partner will have the right to voluntarily withdraw from the Partnership upon not less than ________ days' prior written notice to the other Partners.
23.2. Except as otherwise provided in this Agreement, the voluntary withdrawal of a Partner (a "Dissociated Partner") will have no effect upon the continuance of the Partnership business.
23.3. In the event that a Partner's interest in the Partnership is to be sold, the remaining Partners have a right of first purchase on that interest. If any of the remaining Partners elect to purchase the interest of the Dissociated Partner, those Partners will serve written notice of such election upon the Dissociated Partner within thirty (30) days after receipt of the Dissociated Partner's notice of intention to withdraw, including the purchase price and the method and schedule of payment for the Dissociated Partner's interest. The purchase amount will be determined as outlined in the Valuation of Interest section of this Agreement.
23.4. A Dissociated Partner will exercise the right to withdraw only in good faith and will act to minimize any present or future harm to the remaining Partners as a result of the withdrawal.
24. Involuntary Withdrawal of a Partner
24.1. Events resulting in the involuntary withdrawal of a Partner from the Partnership include, but are not limited to: the death of a Partner; the mental incapacity of a Partner; a disability preventing reasonable participation in the Partnership; a finding of incompetence; breach of fiduciary duties; criminal conviction; expulsion of a Partner; operation of law against a Partner; the bankruptcy or insolvency of a Partner; or any act or omission of a Partner that can reasonably be expected to bring the business or reputation of the Partnership into disrepute.
24.2. Except as otherwise provided in this Agreement, the involuntary withdrawal of a Partner will have no effect upon the continuance of the Partnership business.
24.3. In the event that a Partner's interest in the Partnership is to be sold, the remaining Partners have a right of first purchase on that interest. If any of the remaining Partners elect to purchase the interest of the Dissociated Partner, those Partners will serve written notice of such election, including the purchase price and the method and schedule of payment, upon the Dissociated Partner or their executor, administrator, trustee, committee, or analogous fiduciary, within a reasonable period after acquiring knowledge of the change in circumstances. The purchase amount will be determined as outlined in the Valuation of Interest section of this Agreement.
24.4. A trustee in bankruptcy or similar third party who may acquire a Dissociated Partner's interest in the Partnership will acquire only that Partner's economic rights and interests and will not acquire any other rights of that Partner, be admitted as a Partner, or have any right to exercise any management or voting interest.
25. Dissociation of a Partner
25.1. Where the remaining Partners have purchased the interest of a Dissociated Partner, the purchase amount will be paid in full, but without interest, within ninety (90) days of the date of withdrawal, unless otherwise agreed in writing.
25.2. The Partnership will retain exclusive rights to use the trade name, firm name, and all related brand and model names of the Partnership.
25.3. Where the voluntary or involuntary withdrawal of a Partner results in only one Partner remaining, or where no buyer is found to purchase the interest of the Dissociated Partner, the Partnership will proceed in a reasonable and timely manner to dissolve, with all debts being paid first prior to any distribution of remaining funds. Valuation and distribution will be determined as described in the Valuation of Interest section of this Agreement.
25.4. On any purchase and sale of a Partnership interest, a Dissociated Partner will have liability only for Partnership obligations incurred during their time as a Partner. Immediately upon the sale of a withdrawing Partner's interest, the Partnership will prepare, file, serve, and publish all notices required by law to protect the withdrawing Partner from liability for further Partnership obligations.
25.5. The remaining Partners retain the right to seek damages from a Dissociated Partner where the dissociation resulted from a malicious or criminal act, breach of fiduciary duty, breach of this Agreement, or conduct that could reasonably be foreseen to bring harm or damage to the Partnership or its reputation.
26. Dissolution
26.1. Except as otherwise provided in this Agreement, the Partnership may be dissolved only with the unanimous vote of all the Partners.
26.2. In the event of the dissolution of the Partnership, each Partner will share in any remaining assets or liabilities of the Partnership in proportion to their respective ownership interests (the "Dissolution Distribution").
26.3. Upon the dissolution of the Partnership and liquidation of Partnership property, and after payment of all selling costs and expenses, the liquidator will distribute the Partnership assets in the following order of priority:
I. in satisfaction of liabilities to creditors (except Partnership obligations to current Partners);
II. in satisfaction of Partnership debt obligations to current Partners; and
III. to the Partners according to the Dissolution Distribution described above.
26.4. The claims of each priority group will be satisfied in full before satisfying any claims of a lower priority group. Any excess of Partnership assets after liabilities, or any insufficiency in Partnership assets in resolving liabilities under this section, will be shared by the Partners according to the Dissolution Distribution described above.
27. Valuation of Interest
27.2. No allowance will be made for goodwill, trade name, patents, or other intangible assets, except where those assets have been reflected on the Partnership books immediately prior to the valuation.
28. Goodwill
The goodwill of the Partnership will be assessed at an amount to be determined by appraisal using generally accepted accounting principles (GAAP).
29. Title to Partnership Property
Title to all Partnership property will remain in the name of the Partnership. No Partner or group of Partners will have any ownership interest in such Partnership property, in whole or in part, except as a partnership interest under the Act.
30. Force Majeure
A Partner will be free of liability to the Partnership where the Partner is prevented from executing their obligations under this Agreement, in whole or in part, due to a force majeure event such as earthquake, flood, fire, epidemic, pandemic, war, civil unrest, or any other unforeseen and uncontrollable event, provided that the Partner has communicated the circumstances of the event to all other Partners and taken all appropriate actions to mitigate the effect of the event.
31. Duty of Loyalty
No Partner will engage in any business, venture, or transaction, directly or indirectly, that competes with the business of the Partnership or that would be in direct conflict of interest with the Partnership, without the unanimous written consent of the remaining Partners. Any business, venture, or transaction with any appearance of conflict of interest must be fully disclosed to all other Partners. Failure to comply with any term of this section will be deemed an involuntary withdrawal of the offending Partner and may be treated accordingly by the remaining Partners.
32. Duty of Accountability for Private Profits
Each Partner must account to the Partnership for any benefit derived by that Partner, without the consent of the other Partners, from any transaction concerning the Partnership or from any use by that Partner of the Partnership property, name, or business connection. This duty continues to apply to any transactions undertaken after the Partnership has been dissolved but before its affairs have been completely wound up by the surviving Partner(s) or their agent(s).
33. Duty to Devote Time
Each Partner will devote such time and attention to the business of the Partnership as the majority of the Partners may from time to time reasonably determine for the conduct of the Partnership business.
34. Forbidden Acts
34.1. No Partner may do any act in contravention of this Agreement.
34.2. No Partner may permit, intentionally or unintentionally, the assignment of express, implied, or apparent authority to a third party that is not a Partner in the Partnership.
34.3. No Partner may do any act that would make it impossible to carry on the ordinary business of the Partnership.
34.4. No Partner may confess a judgment against the Partnership.
34.5. No Partner will have the right or authority to bind or obligate the Partnership to any extent with regard to any matter outside of the intended purpose of the Partnership.
34.6. Any violation of the above forbidden acts will be deemed an involuntary withdrawal of the offending Partner and may be treated accordingly by the remaining Partners.
35. Indemnification
Each Partner will be indemnified and held harmless by the Partnership from and against any and all claims of any nature whatsoever arising out of that Partner's participation in Partnership affairs. A Partner will not be entitled to indemnification under this section arising out of gross negligence, willful misconduct, or breach of any provision of this Agreement.
36. Liability
A Partner will not be liable to the Partnership, or to any other Partner, for any mistake or error in judgment or for any act or omission done in good faith and reasonably believed to be within the scope of authority conferred or implied by this Agreement or the Partnership. Nothing in this Agreement limits the liability of the Partners to third parties as imposed by the Act.
37. Dispute Resolution
In the event of a dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity, or termination, the Partners will first attempt to resolve the dispute amicably through good faith negotiation. If the dispute cannot be resolved through negotiation within a reasonable period, the Partners agree to submit the dispute to mediation administered in the Province of ________. If mediation is unsuccessful, the dispute will be referred to and finally resolved by arbitration before a single arbitrator in ________, in accordance with the applicable arbitration legislation of the Province of ________. The decision of the arbitrator will be final and binding upon all Partners.
38. Assignment
No Partner may assign, transfer, pledge, mortgage, or otherwise dispose of their interest in the Partnership, in whole or in part, without the prior unanimous written consent of all the remaining Partners. Any purported assignment, transfer, or other disposition made in contravention of this section will be void and of no effect.
39. Notice
Any notice to be given under this Agreement must be in writing and must be delivered personally, sent by registered mail, or sent by electronic transmission to the address of the relevant Partner set out at the head of this Agreement, or to such other address as a Partner may designate in writing. Notices will be deemed received: if delivered personally, on the day of delivery; if sent by registered mail, three (3) business days after the date of posting; and if sent by electronic transmission, on the next business day following transmission. In proving the giving of a notice it will be sufficient to prove that the notice was properly addressed and delivered, posted, or transmitted, as the case may be.
40. Amendments and Modifications
This Agreement may be amended or modified only by an instrument in writing signed by all of the Partners.
41. Waiver
No waiver of any provision of this Agreement will be effective unless in writing and signed by the Partner against whom the waiver is sought to be enforced. No failure or delay by any Partner in exercising any right under this Agreement will operate as a waiver of that right.
42. Severability
The Partners acknowledge that if a dispute between them arises out of this Agreement or its subject matter, they would want a court to interpret this Agreement as follows:
a) with respect to any provision held unenforceable, by modifying that provision to the minimum extent necessary to make it enforceable, or, if that modification is not permitted by law, by disregarding that provision;
b) if an unenforceable provision is modified or disregarded in accordance with this section, by holding that the rest of this Agreement will remain in effect as written;
c) by holding that any unenforceable provision will remain as written in any circumstances other than those in which the provision is held to be unenforceable; and
d) if modifying or disregarding the unenforceable provision would result in a failure of an essential purpose of this Agreement, by holding the entire Agreement unenforceable.
43. Counterparts
This Agreement may be executed in several counterparts, each of which will be deemed an original but all of which together will constitute one and the same instrument. Delivery by facsimile or by electronic transmission in portable document format (PDF) of an executed counterpart of this Agreement is as effective as delivery of an originally executed counterpart.
44. Governing Law
44.1. This Agreement will be governed by and construed in accordance with the laws of the Province of ________ and the laws of Canada applicable therein.
44.2. The Partners irrevocably attorn to the exclusive jurisdiction of the courts of the Province of ________ and all courts competent to hear appeals therefrom, subject to the dispute resolution provisions of this Agreement.
45. Entire Agreement
This Agreement constitutes the entire understanding between the Partners with respect to the subject matter of this Agreement and supersedes all prior agreements, representations, and understandings, whether written or oral, between the Partners.
IN WITNESS WHEREOF the Partners have executed this Agreement as of the date first written above.
____________________________
________
Date: ________
____________________________
Witness: ________
____________________________
________
Date: ________
____________________________
Witness: ________
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