# The Essential Elements of a Business Partnership Contract
Entering into a business partnership should not be taken lightly. Even if your new partner is your best friend, you’ll want to make sure you plan ahead for all possible contingencies.
To help mitigate any future problems, business leaders from Young Entrepreneur Council recommend that these 10 elements be part of a partnership contract.
## Voting Rights Structure
– Clearly define the voting rights structure for any management decision to avoid future conflicts.
## Clear Roles, Responsibilities, and Contributions
– Outline each partner’s roles, responsibilities, and contributions before committing to a business partnership to avoid miscommunications and conflicts.
## Dispute Resolution Clause
– Include a dispute resolution clause in the contract to specify how conflicts will be managed, preventing costly court proceedings.
## Crisis Management Plan
– It’s important to include a crisis management plan in your partnership contract to prepare for unexpected challenges and set up fail-safe measures.
## Explanation of How Profits Will Be Split
– Specify how each party will split profits to ensure fair financial benefit from the business activities.
## List of Shared Resources
– Add a list of shared resources that will be shared by the concerned parties to avoid potential conflicts and confusion in the future.
## Non-Compete Clause
– Include a non-compete clause to protect company secrets and relevant information, preventing partners from using it to create competing products.
## Metrics for Goal Measurement
– Clearly define the expected goals and the metrics that will be used to measure them to ensure mutual understanding and a healthy business partnership.
## Succession Plan
– Address what will occur and who takes the reins when something happens, creating peace of mind and clarity in your partnership.
## Exit Strategy
– Ensure there’s an exit strategy in the contract to handle assets and debts if the partnership hits a rough patch.
By including these 10 essential elements in a business partnership contract, you can ensure a successful and well-prepared collaboration.
