Free Illinois Partnership Agreement

IN CONSIDERATION OF and as a condition of the Partners entering into this Agreement and other valuable consideration, the receipt and sufficiency of which consideration is acknowledged, the parties to this Agreement agree as follows:

Place of Business

Partner Contribution Description Agreed Value
$______________________ USD
$______________________ USD

Withdrawal of Capital

Interest on Capital

Profit and Loss

Compensation for Services Rendered

Books of Account

  1. a statement of all information as will be necessary for the preparation of each Partner's income or other tax returns;
  2. a copy of the Partnership's federal income tax returns for that fiscal year;
  3. a breakdown of the profit and loss attributable to each Partner; and
  4. any additional information that the Partners may require.

Banking and Partnership Funds

Contract Binding Authority

Admitting a New Partner

Voluntary Withdrawal of a Partner

Involuntary Withdrawal of a Partner

Dissociation of a Partner

Distribution of Property on Dissolution of Partnership

  1. in satisfaction of liabilities to creditors except Partnership obligations to current Partners;
  2. in satisfaction of Partnership debt obligations to current Partners; and then
  3. to the Partners according to the Dissolution Distribution described above.

Valuation of Interest

Title to Partnership Property

Duty of Loyalty

Duty of Accountability for Private Profits

Duty to Devote Time

  1. "Additional Capital Contributions" means Capital Contributions, other than Initial Capital Contributions, made by Partners to the Partnership.
  2. "Capital Contribution" means the total amount of cash or Property contributed to the Partnership by any one Partner.
  3. "Dissociated Partner" means any Partner who is removed from the Partnership through a voluntary or involuntary withdrawal as provided in this Agreement.
  4. "Expulsion of a Partner" can occur on application by the Partnership or another Partner, where it has been determined that the Partner:
    1. Has engaged in wrongful conduct that adversely and materially affected the Partnership's business;
    2. Has willfully or persistently committed a material breach of this Agreement or of a duty owed to the Partnership or to the other Partners; or
    3. Has engaged in conduct relating to the Partnership's business that makes it not reasonably practicable to carry on the business with the Partner.

    IN WITNESS WHEREOF the Partners have duly affixed their signatures under hand and seal on this 3rd day of _____________ .

    SIGNED, SEALED, AND DELIVERED

    in the presence of:

    Witness Name: ____________________________

    Witness Name: ____________________________

    Everything You Need to Know About the Partnership Agreement in Illinois

    What the worst that could happen if you don’t create a legally binding contract for your partnership business?

    Well, let’s take a look at some of the grim possibilities:

    One, the courts might get involved to help resolve your troubles. Now, although the courts are just and fair, the due process in courts is long, and by the time things are settled, you may not be able to resolve your issues or get things back on track ever again.

    Then there’s the financial bit of things where a partner or some partners might feel aggrieved if one partner takes a lion share of the profits, despite contributing the same or even less capital compared to the other partners.

    Also, without a legally binding contract, partners offering valuable expertise might easily be short-changed, and they might not be compensated as well as they should be.

    Lastly, we shouldn’t forget that the absence of a legal framework created through an enforceable contract would mean an unstable foundation to the partnership, and minor squabble would jeopardize the partnership business.

    Therefore, a partnership contract, though not mandatory as per the state laws, is unequivocal, crucial documentation that lays out the rules and regulations while clarifying roles, relationships, and the responsibilities of the partners (to each other) and to the partnership.

    Note that the partnership contract is also called a partnership agreement, a business partnership agreement, articles of partnership, or a general partnership agreement. It’s enforceable as long as it bears the signatures of the partners, and it doesn’t have to be notarized.

    How to Create A Partnership Agreement

    You’d expect the process of creating a partnership agreement in Illinois to be long and tedious, but thanks to our simple, easy to use, editable, downloadable, and printable free Illinois partnership agreement forms, the process is seamless. Our forms are comprehensive legal partnership agreement templates with all the sections that must be present in the partnership agreement.

    The sections of the contract contain the clauses with provisions to govern the operations of the partnership business.

    Therefore, in addition to the name of the business, it’s location, purpose, name of the partners, and the duration the partnership is expected to be in operation, the agreement also features all the ground rules that are expected to govern the partnership and its people.

    Some of the important sections of the business partnership agreement include:

    1. The start date of the partnership and the planned duration of the partnership business
    2. The cash and capital contributions of the partnership
    3. The allocation/ distribution of the business profits and losses, as well as the steps for the recovery of the losses
    4. Capital draws per partner; when and how much capital a partner can draw
    5. Financial reporting procedures and methods.
    6. Appointment of the managing partner, the roles and the responsibilities of the managing partner, and whether the managing partner gets a bigger share of the profits or if they earn a salary
    7. Appointment of the tax matters representative – their qualifications, authority, and limitations
    8. Decision making and the decisions that require the joint/ unanimous consent of all members
    9. Limitations to the authority of the partners
    10. Voting rights of the partners
    11. Whether new partners will be permitted in the future and the terms of permitting new partners
    12. Steps followed when a partner terminates/ withdraws their partner status
    13. Dealing with the death of a partner, payout to the deceased beneficiaries and the continuity of the partnership after a partner dies
    14. Meetings
    15. Partner buy out procedures and how much a partner would be worth in a payout
    16. The extent of involvement of partners in the day-to-day operations of the partnership
    17. Rules against launching a business that competes with the partnership business directly
    18. Dispute resolution and the incorporation of a mediation clause
    19. Factors that would necessitate the dissolution of the partnership
    20. Partnership winding-up procedures

    How To Cancel A Partnership Agreement

    You don’t hear this often, but partnership contracts are canceled around us all the time because of disagreements between and among the partners, growth, or the need to constitute a different structure of the business.

    Before you cancel a partnership contract, talk to the other partners and a lawyer about liability (personal) for the debts of the partnership.

    Keep in mind that although you don’t need the consent of the other partner(s) to cancel the partnership contract, you need to look at your liability from the cancellation, as well as the effects of the agreement’s cancellation on leases, loans, and other contracts signed with the other partners. Ensure that your actions don’t result in your getting sued by third parties. Therefore, you must act along with the other partners and also, notify the third parties involved.

    Notification to the third parties allows you to negotiate terms with them, saving you from unexpected liabilities.

    Where the state is involved, ensure that you abide by the laws.

    Whether you are in Chicago, Champaign, Peoria, Rockford, Joliet, Naperville, Schaumburg, or any other city in Illinois, you could create your partnership agreement today using our free partnership agreement form.

    Sample Illinois Partnership Agreement