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Partnership Agreement Negotiation: Key Terms, Negotiation Tips

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What is a Partnership Agreement Negotiation?

A partnership agreement is a contract signed by two or more parties involved in running a business that defines all key terms of their working relationship, such as their duties, profits and losses, and dispute resolution.

This agreement can be negotiated, but it requires some important tips and strategies for success.

Before you go ahead and sign a partnership agreement that you haven’t negotiated, you should read the rest of this article to explore key aspects of a partnership agreement, tips for effective negotiations, and how a lawyer can help you through the process.

What are Key Terms in a Partnership Agreement Negotiation?

There are some essential terms in a partnership agreement to know about and which you can potentially discuss with the other parties.

  • Partner contributions. This section defines the contributions all partners will make, such as cash or intellectual property. It prevents disputes and guarantees a fair contribution valuation.
  • Distributions. How the company’s profits and losses will be distributed among its partners needs to be outlined for clarity.
  • Roles. Partners need to know their specific duties, such as regarding business operations. When roles are properly defined in the agreement, it ensures greater productivity and accountability.
  • Decision-making. Authority and voting rights should be defined, such as if majority votes are required for decisions. It prevents deadlock situations that could be harmful to the company’s operations.
  • Dispute resolution. Should arguments arise between partners, they should be able to refer to the dispute-resolution method outlined in the agreement. It saves time and money.
  • New partners. If new partners want to be invited into the business, this clause includes the processes to follow and how current partners will be protected.
  • Exit. When a partner moves on from the company, there should be clarity over what should happen so uncertainty is avoided. This section can include information about buyouts.

What are Tips for Negotiating Partnership Agreements?

When negotiating a partnership agreement, you should consider some important tips.

Be Open

An important approach to the negotiation process is to be honest. Speak about your goals and expectations so you can assess where the other party stands. This can provide insight into what they want and why the terms are important to them, which can help you find common ground.

Clarify ‘What if?’ Situations

It’s important to discuss all possible ‘what if?’ scenarios and their consequences, especially if these are not clearly defined in the agreement. For example, what happens if a partner exits or the business collapses?

Get a Legal Review of Your Partnership Agreement

Once you’ve reviewed your partnership agreement, you should consider getting it legally reviewed by a lawyer. This will provide clarity on all terms and help you understand everything. It will also help you identify areas of concern that you’d want to negotiate with the other partners.

To request a legal review of your partnership agreement, you can post your project for free on the ContractsCounsel marketplace. You can include some details of what you need so that the right lawyers will contact you. You’ll receive multiple bids from lawyers on the platform, and you can check their profiles for information about their expertise, credentials, and other factors.

Record all Changes in a Written Document

Whatever terms you negotiate, if you reach an agreement with the other party, you should put it down in writing. This will ensure that you’re held accountable to the new terms and it prevents misunderstandings which can arise from verbal agreements.

Before you have a final agreement, it’s advisable to take notes during negotiations so you don’t miss anything. This can also help you to go over what was suggested before you agree to the terms.

Understand Your Negotiables

Before discussing terms of the agreement with your partners, you should think about your principles, goals, and what you’re happy to negotiate versus what you’re not. This will guide you in terms of what you can compromise.

Make it Reciprocal

Focus on reaching a win-win situation as much as possible. If you’re giving up certain benefits or concessions during the negotiation, you should get something in return. Have a list of what you’re hoping to change in the agreement so that you have options to fall back on during discussions.

Support Suggestions with Research

When making a suggestion for something you wish to gain under the agreement, you can strengthen your position by having strong research behind it. Before the negotiation, conduct research, such as of industry norms, and have it ready if you need it during discussions.

A benefit of this approach is that you come across as professional and prevent emotions from dictating where the discussion should go.

How Can a Lawyer Help You With Partnership Agreement Negotiations?

You don’t always need to hire a lawyer when preparing to negotiate your partnership agreement, but it can be highly useful, especially if the contract is complex or you need help with negotiating it. Here are some ways in which a lawyer will help you through the process.

  • They’ll review or draft your partnership agreement so that it’s clear, legally sound, and fair to all parties involved.
  • They’ll spot any risks you might miss, such as clauses that could put you at personal risk.
  • They’ll negotiate terms you want to change on your behalf, while advocating for your interests.
  • They’ll guard your intellectual property, so that you don’t have to worry about ownership issues with your patents or trademarks.
  • They’ll prevent disputes by clarifying all contributions.
  • They’ll help you draft legal and specific amendments to the contract so that there aren’t any misunderstandings.
  • They’ll provide support over time, depending on how the company changes.

Where Can You Find a Lawyer for Partnership Agreement Negotiations?

If you need to work with a lawyer for help with navigating a partnership agreement negotiation, you should consult a lawyer on ContractsCounsel. All lawyers on the platform are vetted and have years of experience in assisting clients with negotiating for more favorable partnership agreement terms. They’ll assess your situation, help you formulate effective strategies for negotiating with other partners, and protect your current and future interests.


ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.


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