In the absence of a Partnership Agreement, the rights, responsibilities and liabilities of the Partners are controlled by the provisions of the Pennsylvania Uniform General Partnership Act. As with Shareholders Agreements, Operating Agreements, and Limited Partnership Agreements, Partners in a General Partnership can specify in writing the particular agreements that the partners have among themselves. Partners in a General Partnership are generally liable for all the obligations of the Partnership and agreements set forth in the Partnership Agreement do not restrict the rights of third parties who do business with the Partnership.
A General Agreement may address, among other things, the following subjects:
- Capital Contributions of partners
- Allocation of Profits and Losses
- Distribution of Net Cash Flow
- Powers and duties of each Partner and limitation on powers of each Partner
- Hiring and firing of employees
- Compensation of partners
- Bonus provisions
- Decisions that require partner approval
- Buy-Sell obligations, options or rights of first refusal
- Events that cause termination and dissolution of the Partnership
- Disability provisions
- Retirement provisions
- Arbitration, mediation or other dispute resolution mechanisms
Partnership Agreements can also contain a “right of first refusal” which gives either the other partners or the partnership the first opportunity to buy the partnership interest, at a designated price, before it is sold to outsiders. (See Buy-Sell Agreements subpage). For example, if an employee-partner dies, becomes disabled or leaves the employment of the Partnership, the Partnership Agreement can require that the individual sells his partnership interest back to the Partnership or to the other partners.