partnership agreement
A partnership agreement is the written document that spells out who owns what, who does what, and what happens when partners disagree or one wants out.
In plain English
Two friends borrow money from the same uncle. One writes down how much, when to pay back, and what happens if the business fails. The other just shakes hands and says 'ah, we are family, no need for paper.' Fast forward two years and you can guess which friendship survived and which one is now a WhatsApp group full of unread messages and calm grudges.
A partnership agreement is that piece of paper the second friend refused to write. It is a document that sets out, in plain terms, who put in what money, who does what work, how profits get shared, and what happens if one person wants to leave, dies, or simply stops pulling their weight.
Say two women in Lagos start a bukka together. One has the recipes and does the cooking, the other has the shop space and handles customers. Without an agreement, the day one of them wants to bring in her cousin as a new partner, or wants to close the business and go abroad, there is nothing to guide the conversation except raised voices and old grievances.
In the UK, partnerships are common among consultants, solicitors, and small trading businesses, and most sensible ones sign a deed of partnership before opening a joint account. A Nigerian professional in London who starts a cleaning company with a friend from church would be wise to do the same, because friendship and business have different rules, even when they share the same people.
This is not about expecting the worst from someone you trust. It is about respecting the business enough to protect it from ordinary human moments, like disagreement, distance, or death, that no amount of goodwill can fully prevent.
Two brothers start a logistics business with ₦3,000,000 each. Their agreement states that profits split 50/50, decisions above ₦500,000 need both signatures, and if either wants out, the other has first right to buy their share at a value set by an independent accountant.
Questions people ask
Do we need a lawyer to write a partnership agreement?
It helps a lot, but even a simple document written together and signed by both parties, ideally witnessed, is far better than nothing. A lawyer just makes sure the wording holds up if things ever get tense.
What should a partnership agreement always include?
At minimum it should cover who owns what percentage, who contributes what money or work, how profits and losses are shared, how decisions get made, and a clear process for one partner leaving or the partnership ending.
Can a partnership agreement be changed later?
Yes, as long as all partners agree to the changes and sign an updated version. Many agreements even include a clause explaining exactly how future changes should be handled.
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