What to include in a business partnership agreement
A business partnership agreement is a agreement between two companies that defines the terms of their relationship. This contract establishes who will do what, how the products or services will be delivered, the payment schedule and other important details. A well-drafted business partnership agreement protects both companies in the event of a problem. In this blog post, we provide a step-by-step guide to drafting a business partnership agreement
1 – Define the purpose of the business partnership
The first step is to clearly define the objective of the partnership:
- What are the goals of this collaboration?
- What does each party hope to achieve?
Be as specific as possible to avoid confusion later.
2 – The type of commercial agreement
Decide on the trade agreement. The first step is to decide on the type of trade agreement you wish to establish. There are many different types of agreements, such as joint ventures licenses cross-licensing and contracts supply agreements. Consider what type of agreement would be most appropriate for your business relationship.
3 -Roles and responsibilities of the parties
Describe the roles and responsibilities of each party. Once you have selected the type of business agreementIn a business agreement, you need to define the roles and responsibilities of each party. This means specifying what each company will do, how it will do it, and when it will do it. For example, if you create a joint ventureyou will need to specify who will manage the joint venture and how decisions will be made.
You need to define the roles and responsibilities of each partner to avoid duplication or gaps in coverage. :
- What will be the responsibilities of each partner?
- Who will be the point person for communication?
- Who will make the decisions in case of disagreement?
Answering these questions up front will save you a lot of trouble later…
4 – The calendar and the durations
Set a timeline for the agreement. All the business partnership agreements must include a timetable for the duration of the agreement. This gives both companies certainty and stability for the future. It is important to note that some agreements may be renewed automatically while others must be renegotiated after a certain period.
Contracts may be either indefinite durationor to fixed term. Both approaches have advantages and disadvantages. Therefore, it is important to decide which is best for your partnership. If you choose an open-ended contract, be sure to include provisions on how each party can terminate the agreement if they wish
4 – Conflict Resolution
Determine how the disputes will be resolved. No matter how well you plan, there is always a risk that something will go wrong in your business relationship. That’s why it’s important to determine up front how disputes will be resolved. That way, if something goes wrong, both parties will know exactly what to do and who to contact to resolve the problem.
5 – Financial Terms
Of course, a commercial agreement necessarily implies a financial aspect. financial. It is rare that a commercial agreement is purely philanthropic… The commercial partnership contract shall therefore determine the financial conditions. This can be for example:
- a lump sum;
- a percentage of the turnover;
- a percentage on the margin;
- a reciprocity between the 2 companies or in other words an “exchange of goods”;
Remember also to determine the terms of payment as well as the frequency For example, every sale, every month, every quarter or annually.
A business partnership agreement is a valuable tool for any business relationship between two companies. By outlining the roles and responsibilities of each party, setting a timeline for the agreement, and determining how disputes will be resolved, you can protect both businesses in case something goes wrong. By following these steps, you will be able to draft a solid business partnership agreement that meets the needs of both companies involved.
The more refined it is from the beginning to anticipate all eventualities and terms, the better the business relationship will be. As the saying goes, words fly but writing remains…