Free Partnership Agreement Template

GENERAL PARTNERSHIP AGREEMENT

Chenwilliams Digital Consulting · Governed By The Law Of The State Of Washington

This General Partnership Agreement (this "Agreement") is entered into as of April 1, 2026 by and between David Chen (tel. (206) 555-0142 · email dchen@email.com) and Sara Williams (tel. (425) 555-0198 · email swilliams@email.com) (collectively, the "Partners"), holding ownership interests of 55% and 45% respectively, who agree to form a general partnership under Washington Revised Uniform Partnership Act, RCW ch. 25.05, for the purpose of conducting the business described herein.

The Partners hereby form a general partnership under Washington Revised Uniform Partnership Act, RCW ch. 25.05, to be known as "ChenWilliams Digital Consulting," effective April 1, 2026. The Partnership shall engage in: Providing digital marketing, SEO, and brand strategy consulting services to small and mid-size businesses. The Partnership shall have its principal place of business at 200 Pike Street, Suite 400, Seattle, WA 98101. The Partners acknowledge that, under the revised act, the Partnership is an entity distinct from its partners (RUPA §201), while for federal income tax purposes it remains subject to the aggregate/conduit rules of I.R.C. §761 and Subchapter K.

David Chen shall contribute 55,000.00 USD and Sara Williams shall contribute 45,000.00 USD to the Partnership as initial capital. Additional capital contributions may be made only by unanimous written agreement of all Partners, and no Partner shall be required to contribute beyond the initial amount stated herein. Each Partner's capital account shall be maintained in accordance with the substantial-economic-effect rules of Treasury Regulation §1.704-1(b)(2), and the Partnership shall determine each Partner's share of items of income, gain, loss, deduction, and credit consistent with I.R.C. §704 and the Treasury Regulations thereunder.

Net profits and losses shall be allocated among Partners in proportion to their respective ownership percentages: David Chen (55%) and Sara Williams (45%). The Partners expressly intend this allocation to displace the statutory default rule, under which each partner is entitled to an EQUAL share of partnership profits regardless of capital contributed (RUPA §401(b)). Distributions shall be made quarterly, or at such other times as all Partners may agree in writing. Consistent with the pass-through regime of I.R.C. §701, the Partnership shall not itself be subject to federal income tax; each Partner shall separately report their distributive share on their individual federal income tax return pursuant to I.R.C. §§702 and 704, whether or not any cash is actually distributed.

Pursuant to RCW ch. 25.05 (RUPA §306 as enacted), all partners are liable jointly and severally for all obligations of the partnership. The Partnership shall indemnify each Partner for payments made and liabilities reasonably incurred in the ordinary and proper conduct of Partnership business (RUPA §401(c)). Partners further agree to indemnify and hold harmless one another from claims arising from their individual unauthorized acts, gross negligence, or willful misconduct. The Partnership shall maintain insurance coverage appropriate to its business as determined by Partner agreement.

Each Partner is an agent of the Partnership for the purpose of its business (RUPA §301): an act of a Partner apparently carried on in the ordinary course binds the Partnership unless the Partner lacked authority and the third party knew or had notice of that fact. No Partner shall represent to any person that any non-partner is a partner of the Partnership. The Partners acknowledge the doctrine of partnership by estoppel (RUPA §308), under which a person who is held out as a partner with consent may bind the Partnership to third parties who rely on the representation — and shall therefore exercise care in all external communications regarding the identity of the Partners.

David Chen shall serve as Managing Partner, responsible for day-to-day operations. Each Partner has equal rights in the management and conduct of the Partnership business (RUPA §401(f)), and routine operational decisions may be made by any Partner acting within the scope of their authority. Major decisions — including incurring debt or expenditure exceeding 5,000.00 USD in a single transaction or series of related transactions, hiring or terminating key employees, entering new business lines, admitting new partners, or selling material assets — shall require a simple majority in number of the Partners, consistent with the rule that matters outside the ordinary course require the consent of all partners absent contrary agreement (RUPA §401(j)). Differences as to ordinary matters not resolved by the required vote shall be escalated under the Dispute Resolution clause before any unilateral action is taken.

Each Partner owes the Partnership and the other Partners duties of loyalty and care as set forth in RUPA §404, including the duty to account for any property, profit, or benefit derived from Partnership business; to refrain from self-dealing; and to refrain from competing with the Partnership before dissolution. These duties reflect the "punctilio of an honor the most sensitive" standard of Meinhard v. Salmon, 249 N.Y. 458 (1928). Each Partner shall also discharge all duties consistently with the obligation of good faith and fair dealing. The Partners elect to preserve the full statutory and common-law fiduciary framework without modification.

Any Partner wishing to withdraw (a "dissociation" under RCW ch. 25.05 (RUPA §§601, 701 as enacted)) shall provide written notice to all other Partners at least 30 days in advance. Dissociation does NOT by itself dissolve the Partnership: the Partnership continues, and the dissociated Partner's interest shall be purchased for a buyout price determined by the book value of the withdrawing Partner's interest as reflected in the most recent financial records, consistent with the statutory buyout framework (under which the default price is the greater of liquidation value and going-concern value). The buyout shall be paid within ninety (90) days of the determination of the price. A Partner who dissociates wrongfully — before the completion of an agreed term or undertaking, or in breach of this Agreement — is liable to the Partnership for damages caused by the wrongful dissociation, which may be offset against the buyout price. The dissociated Partner remains liable for Partnership obligations incurred before dissociation.

For a period of 2 year(s) following a Partner's withdrawal, dissociation, or buyout under this Agreement, the withdrawing Partner shall not, within the geographic area in which the Partnership conducts substantial business as of the withdrawal date, directly or indirectly own, manage, operate, or provide services to any business that competes with the Partnership, nor solicit the Partnership's customers or employees for a competing business. State enforceability: This covenant is entered into in connection with the Partner's dissociation from, and the buyout of the Partner's interest in, the Partnership, and the parties intend it to fall within Wash. Rev. Code §49.62.010(4)(b). Permitted in connection with sale of a business — separate from employment context. The parties further acknowledge that the FTC Non-Compete Rule was vacated nationwide in Ryan, LLC v. FTC (N.D. Tex. 2024) and was formally removed from 16 C.F.R. Part 910 effective February 12, 2026; no federal rule currently bars this covenant. If a court finds this covenant overbroad, it shall be enforced to the maximum extent permitted by the law of Washington.

The Partnership may be dissolved by unanimous written agreement of all Partners, or upon a dissolution event under RCW ch. 25.05 (RUPA §§801, 807 as enacted). Upon dissolution, the Partnership shall be wound up and its assets applied in the statutory order: first to creditors (including Partners who are creditors), then to the settlement of partner accounts, with any surplus distributed in accordance with the Partners' capital-account balances or, as otherwise agreed, their ownership percentages. The Partners shall execute and file any statement of dissolution or cancellation required by the law of Washington and shall cooperate in the orderly completion of unfinished business.

The Partnership shall file an annual federal information return on IRS Form 1065 and furnish each Partner a Schedule K-1. David Chen is designated as the partnership representative under I.R.C. §6223 (Bipartisan Budget Act audit regime), with sole authority to act for the Partnership in federal tax audits; the representative shall keep all Partners informed and shall not settle a material audit adjustment without the consent required for major decisions under this Agreement. The Partnership shall, where eligible, elect out of the BBA centralized audit regime under I.R.C. §6221(b) if all Partners so agree for a given year. State pass-through entity tax (PTET): The Partners authorize the Partnership to make any available state pass-through entity tax election where doing so is expected to benefit the Partners in the aggregate — roughly 36 states offer an elective PTET (Connecticut's is mandatory), which allows the entity to deduct state income tax at the federal level notwithstanding the individual SALT deduction cap ($40,400 for 2026 under the One Big Beautiful Bill Act, scheduled to revert to $10,000 in 2030). Washington imposes no personal income tax (no PTET), but the partnership is subject to Washington's Business and Occupation (BandO) gross-receipts tax. Any PTET payment shall be charged against the distributive shares of the Partners whose tax it offsets.

Any dispute arising under this Agreement shall first be submitted to good-faith mediation in the State of Washington before either Party may initiate legal proceedings. Mediation costs shall be shared equally among the disputing Partners.

This Agreement constitutes the entire agreement among the Partners and supersedes all prior discussions, negotiations, and agreements. Amendments to this Agreement require unanimous written consent of all Partners. This Agreement shall be governed by and construed in accordance with the laws of the State of Washington, including the Washington RUPA. If any provision is found to be unenforceable, the remaining provisions shall remain valid and in full force and effect. This Agreement shall be binding upon and inure to the benefit of each Partner's heirs, legal representatives, successors, and assigns.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date indicated.