Partnership Agreement Template
A partnership agreement sets out the rights, obligations, and profit-sharing arrangements between two or more people carrying on business together in Canada. Use our free template to override the default rules in provincial Partnership Acts and avoid disputes over contributions, decision-making, and dissolution.
What Is a Partnership Agreement?
A partnership agreement is a written contract among partners that governs how their business will operate, how profits and losses will be shared, how decisions will be made, and how the partnership will be dissolved. Unlike a corporation, a general partnership has no separate legal personality — the partners are the business, and each is jointly and severally liable for partnership obligations. A written agreement allows partners to customize the relationship and displace statutory defaults that might otherwise apply.
In Canada, partnerships are governed provincially. Ontario’s Partnerships Act, R.S.O. 1990, c. P.5, defines a partnership in section 2 as "the relation that subsists between persons carrying on a business in common with a view to profit." Section 8 makes every partner jointly and severally liable for the wrongful acts and omissions of co-partners acting in the ordinary course of business. British Columbia applies similar rules under the Partnership Act, R.S.B.C. 1996, c. 348.
Without a written agreement, default rules apply: equal profit sharing regardless of contribution, no entitlement to salary, unanimous consent for new partners, and dissolution on the death or retirement of any partner. These defaults rarely match what the partners actually want. A properly drafted partnership agreement replaces them with terms that reflect each partner’s capital contribution, role, and expectations.
What's Covered in This Template
Our partnership agreement is drafted to displace the default statutory rules with terms tailored to your business.
Partnership Name and Business
Registered partnership name and a description of the business to be carried on.
Partner Details and Contributions
Names, addresses, and capital contributions of each partner in cash, property, or services.
Profit and Loss Sharing
Percentages or formulas for allocating profits and losses, overriding equal-sharing defaults.
Management and Decision-Making
Voting rights, quorum requirements, and reserved matters requiring unanimous consent.
Partner Duties and Restrictions
Expected time commitment, fiduciary duties, and non-compete obligations during the partnership.
Drawings and Salaries
Entitlement of partners to regular drawings, salary, or interest on capital.
Admission and Withdrawal of Partners
Process for admitting new partners, voluntary withdrawal, and forced exit.
Dispute Resolution
Escalation, mediation, and arbitration clauses for partner disputes.
Dissolution and Winding Up
Triggering events for dissolution and allocation of assets on winding up.
Governing Law
Selection of the applicable Canadian province and registration obligations.
How to Create a Partnership Agreement
Follow these steps to produce a partnership agreement that reflects the partners’ intentions.
- 1
Agree on Business and Contributions
Document the nature of the business and what each partner is contributing in capital, property, or labour.
- 2
Set Profit-Sharing and Drawings
Decide how profits and losses will be allocated and whether partners will take drawings, salaries, or both.
- 3
Define Management and Authority
Clarify who makes which decisions, what requires a vote, and what requires unanimous consent.
- 4
Plan for Change and Exit
Address how new partners are admitted, how existing partners exit, and how the partnership can be dissolved.
- 5
Register and Sign
Register the business name under the Business Names Act, R.S.O. 1990, c. B.17, or equivalent provincial law, and sign the agreement.
Legal Considerations
Canadian partnership law is provincial, and several statutes interact with the agreement.
This template is for informational purposes only and does not constitute legal advice. Consult a qualified lawyer in your province for advice specific to your situation.
Reviewed for Canadian law
Provincial Partnership Acts
Ontario’s Partnerships Act, R.S.O. 1990, c. P.5, section 2, defines a partnership, and section 8 imposes joint and several liability on partners for wrongful acts in the ordinary course of business. British Columbia’s Partnership Act, R.S.B.C. 1996, c. 348, and similar statutes in Alberta and other provinces provide parallel default rules. A written agreement is essential because these defaults apply automatically where the partners have not agreed otherwise.
Limited Partnerships and LLPs
If partners want limited liability, they must form a limited partnership under the Limited Partnerships Act, R.S.O. 1990, c. L.16 (or provincial equivalent), with at least one general partner and limited partners whose liability is capped at their contribution. Limited liability partnerships (LLPs) are available in most provinces for professional services firms and provide limited liability shielding partners from the negligence of co-partners.
Business Name Registration
Under the Business Names Act, R.S.O. 1990, c. B.17, a partnership carrying on business under a name other than the partners’ names must register that name. Failure to register can prevent the partnership from maintaining legal proceedings in Ontario. Equivalent registration rules apply in other provinces.
Tax Treatment and Fiduciary Duties
A Canadian partnership is not a separate taxpayer under the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.). Each partner reports their share of partnership income on their personal or corporate return. Partners also owe each other fiduciary duties of good faith, full disclosure, and accounting, recognised at common law and reinforced in Canadian partnership case law across every province.
Frequently Asked Questions
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