In general, a partnership can be created when two or more persons, or entities, or a mixture of both, agree and cooperate to provide a product or service in the Massachusetts commercial marketplace. Typically, partners will share the profits and losses of the partnership, and contribute labor resources, intellectual property, business infrastructure, real estate or other intangibles to the partnerships. A partnership does not require a formal agreement or registration as a formal entity with the Massachusetts Secretary of State, Corporations Division.
If partners do not sign a partnership or operating agreement, then Massachusetts state statute will control the operation, management and issue resolution for the partnership. Massachusetts law concerning partnership can serve a a default set of rules unless partners adopt a specific written agreement.. For example, Massachusetts General Law ch. 108 will govern partnerships, ch. 109 will govern Limited Partnerships, and ch. 156D will govern Limited Liability Companies (LLCs). In other words, if you do not adopt a partnership agreement for your business then state law will decide the outcome of any issues that may arise during operations.
It is, therefore, important that you work with a business attorney to draft a comprehensive and robust partnership agreement. This agreement will protect both partners’ interests, rights, and contain a set of operating rules for the partnership. This agreement is also very useful is resolving or setting up a formal process should a dispute arise between the partners. If partners do wind up in litigation, a Court or Arbitrator will always look to the partnership or operating agreement first before deciding any issues.
If you are interested in speaking with a Boston / Lynnfield business lawyer, we can be reached at 781-463-6063.