What is a partnership agreement and when to use it

A partnership agreement is a contract in which two or more persons agree to join forces and resources to pursue a common purpose.
This does not create a legal entity – the partners act jointly but remain individual persons.

Typical examples:

• cooperation between freelancers or entrepreneurs,

• joint project execution,

• temporary business alliances without founding a company.

Legal framework

This agreement is governed by the Czech Civil Code (Sections 2716–2746).
Key features:

• at least two partners,

• joint purpose,

• shared contributions (money, assets, labor),

• shared profits and losses (unless agreed otherwise).

Mandatory elements of a partnership agreement

• Identification of all partners

• Definition of the common purpose

• Description of contributions

• Profit and loss sharing rules

• Decision-making and management rules

• Conditions for termination and settlement

• Date and signatures

Most common mistakes in practice

• Vague purpose or profit sharing terms

• No written agreement (complicates future disputes)

• No clarification of external representation

• Lack of termination or exit strategy

• Confusion with business companies (e.g., LLC)

Recommendations for partners

• Always use a written contract, even if not legally required.

• Define who represents the partnership externally.

• Agree on voting rules and what happens in case of disagreement or termination.

Tip from practice

One of the most common disputes arises from uncertainty about who may act on behalf of the partnership. It is highly advisable to designate this clearly in the agreement and specify liability rules.

Basic partnership agreement template – available for a symbolic fee

If you need a basic partnership agreement template, I can send it by e-mail for a symbolic fee.

It is suitable for typical small-scale cooperation and serves as a working draft.
For more complex arrangements, I will gladly prepare a tailored version.

If interested, contact me via e-mail, contact form, or message. We’ll handle it quickly and easily.

FINAL THOUGHTS – WHAT NOW?

A partnership agreement isn’t just a formality – it’s a legal shield, if drafted properly. And a trap, if not.

Do you want to be sure your contract will hold up even in a crisis? Get in touch and let’s schedule a meeting.