Why do I need a Partnership Agreement?
An Ontario partnership agreement helps clarify the partners legal entitlements and ownership of partnership assets (such as a client list, trademarks, and goodwill) to reduce the chances the partnership will end with a legal dispute.
In Ontario, Partnership Agreements are governed by the Ontario Partnership Act whether or not you have a written agreement in place. Because the default rules in the Partnership Act will apply where there is no agreement or an incomplete agreement between the partners, you can often wind up with a result that seems unfair if you do not have a proper partnership contract between you and your business partners.
Without a clearly defined Partnership Agreement, your partners have equal rights to the profits or assets of the firm regardless of how much they contributed. This can also result in a situation where one partner will not permit the others from using the firm name when they decide they want to exit the venture.