The Agreement between the Partners Should Be Oral or Written
As a business owner or entrepreneur, one of the most important decisions you will make is whom to partner with in your venture. Once you have identified a suitable partner, the next question to consider is whether your agreement should be oral or written.
An oral agreement is based on a verbal understanding between the parties, with no formal documentation. On the other hand, a written agreement is a legally binding document that outlines the terms of the partnership.
While oral agreements can be convenient and easy to establish, they are not recommended for a partnership agreement. Such agreements can be easily forgotten or misinterpreted, leading to disputes and legal complications.
In contrast, a written agreement provides a clear roadmap for the partnership. It outlines the roles, responsibilities, and expectations of each partner, and ensures that both parties are on the same page.
A well-drafted partnership agreement should include the following key elements:
1. Purpose of the partnership: This section should explain the objective of the partnership, including its goals, mission, and values.
2. Roles and responsibilities: The agreement should clearly define the roles and responsibilities of each partner, including their level of involvement in the day-to-day operations of the business.
3. Ownership and distribution of assets: This section should outline how the assets and profits of the partnership will be divided among the partners.
4. Term and termination: The agreement should specify the length of the partnership and the process for termination.
5. Dispute resolution: To avoid legal complications, the agreement should include a section outlining the process for resolving disputes between the partners.
In summary, while an oral agreement may seem like an easy option, opting for a written agreement provides clarity and security. It ensures that both parties are aware of their rights and responsibilities, leading to a smoother and more successful partnership.
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