Use this silent partnership agreement template to create a silent partnership agreement that outlines the terms of your business relationship. This template is designed to be used when one or more partners have no interest in managing the company but wish to invest for a share of the profits.
If you are agreeing with three or more partners, add the additional parties under each section as necessary.
This Silent Partnership Agreement (herein, the "Agreement") is made and entered into by and between:
[Partner1.FirstName] [Partner1.LastName] (herein, the "Partner 1"), with a mailing address of [Partner1.StreetAddress] , [Partner1.City] , [Partner1.State] [Partner1.PostalCode] , and [Partner2.FirstName] [Partner2.LastName] (herein, the "Partner 2"), with a mailing address of [Partner2.StreetAddress] , [Partner2.City] , [Partner2.State] [Partner2.PostalCode] , each a party, collectively referred to herein as the "Partners," on [Document.CreatedDate] .
The purpose of this Agreement is to lay out the silent partnership's terms and conditions between Partner 1 and Partner 2, in which Partner 1 will contribute (insert number)% of the capital and Partner 2 will contribute (insert number)% of the capital for (insert purpose of partnership).
Partner 1 shall contribute $(insert amount) in capital to the partnership, and Partner 2 shall contribute $(insert amount) in capital to the partnership. The capital contribution shall be paid in full upon execution of this Agreement.
Partner 1 shall be responsible for the management and operation of the partnership, including making all decisions related to the business.
Partner 2 shall be a silent partner and shall not be involved in the day-to-day operations of the partnership. Partner 2's sole responsibility shall be to contribute $(insert amount) in capital to the partnership and to share in the profits and losses of the partnership as determined by the provisions of this Agreement.
The profits and losses of the partnership shall be shared equally between the Partners. All profits and losses shall be calculated on a (insert period, e.g, quarterly, annual) basis and distributed to the Partners within (insert number) days of the end of the fiscal year. If the partnership incurs a loss, the Partners shall bear the loss in proportion to their capital contributions.
It may also be useful to include provisions for negotiating the terms of profit and loss distribution if the parties disagree on the calculation, such as through mediation or arbitration. Additionally, consider including provisions for allocating losses if the partnership incurs a loss and provisions for handling any surplus or deficit.
Partner 1 shall have sole decision-making authority for the partnership. Partner 2 shall not be involved in the decision-making process for the partnership and shall not have any management responsibilities.
Either Partner may propose the dissolution of the partnership at any time, provided that written notice is given to the other Partner at least (insert number) days in advance. Upon dissolution, the Partners shall negotiate in good faith to determine the fair and equitable distribution of the partnership's assets.
If the Partners are unable to reach a mutually satisfactory agreement, the assets of the partnership shall be distributed according to the laws of the State of [Partner1.State] .
You can also include provisions for establishing the process for dissolving the partnership in the event of the death or disability of a partner. This could include provisions for transferring ownership interests or managing the distribution of assets upon the dissolution of the partnership.
The Partners shall maintain the confidentiality of all financial and business information related to the partnership unless required by law to disclose such information.