A partnership agreement sets forth the terms and conditions that govern the relationship
between business partners and their obligations to the partnership. Without a written
partnership agreement, state law may determine the default rules as to the rights of
partners and how partnership assets and liabilities will be distributed. Depending on the
goals and purposes of the partnership, various provisions can be included in the
agreement detailing the rules that will govern the relationship between the partners and
what shall occur if specific contingencies arise. This partnership agreement article on
Partners’ Duty of Good Faith and Fair Dealing may be inserted into a partnership
agreement and can be modified depending on the partners’ specific needs.
PARTNERSHIP AGREEMENT ARTICLE
RE: FAILURE TO MAKE INITIAL CONTRIBUTION
Failure to Make Initial Contribution.
If any Partner fails to contribute his/her initial capital contribution [Comment: Or can
also be used for an default in making additional capital contributions] required of him/her
within thirty (30) days after written call for contribution, the other Partners shall be given the
opportunity to contribute amounts that will equal the assessment in default. They shall contribute
amounts equaling the assessment in default in a proportion commensurate with the proportion of
the capital interest in the Partnership of the non-defaulting Partner(s) prior to the call for
additional contributions or in any other proportions that they may determine. The allocation of
profits or losses among all the Partners shall be adjusted according to the change in capital
contributions by the Partners.
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