Partnership Agreement: The Importance of Turning Verbal Agreements into Written Contracts
When starting a business venture, it’s not uncommon to form a partnership with another person or company. Often, these partnerships begin with a verbal agreement or handshake, with the intention of creating a formal written agreement at a later date. While this may seem like a harmless way to start, it is essential to understand the importance of turning verbal agreements into written contracts.
Here are some key reasons why a partnership agreement needs to be put in writing:
1. Legal Protection
A verbal agreement is not a legally binding contract, and it may not be enough to protect you if a dispute arises. With a written contract, the terms and conditions of the partnership are clearly outlined, and both parties have a clear understanding of what is expected of them. This can help avoid disputes and legal issues down the line.
2. Clarity
Without a written contract, misunderstandings can arise. Each party may have a different recollection of the agreement`s terms, causing confusion and conflict. A written contract ensures that everyone is on the same page and eliminates any confusion or misconceptions.
3. Accountability
A written contract holds both parties accountable for their responsibilities and obligations. It provides a clear framework for how the business will operate, including roles, expectations, and consequences for failure to adhere to the terms outlined. This ensures that everyone is responsible for their actions and promotes a healthy and productive partnership.
4. Flexibility
A written contract allows for flexibility in the partnership`s terms. As circumstances change or new opportunities arise, the contract can be updated and revised to reflect these changes. This ensures that the partnership remains relevant and effective.
In conclusion, turning a verbal partnership agreement into a written contract is essential for legal protection, clarity, accountability, and flexibility. Remember to consult with an experienced attorney to ensure that your partnership agreement complies with state and federal laws and includes all necessary provisions. By doing so, you can safeguard your interests and help ensure your partnership’s success.