When entering a partnership, it is important to announce the rights and duties of all the partners involved, as well as the rules within the partnership. If there are provisions missing as regards the operation of the partnership, the partnership’s rules will default to the applicable statute. In Florida, the Florida Revised Uniform Partnership Act (“FRUPA”) provides the default rules for the partnership. In a situation where an event occurs outside the purview of the partnership agreement, the outcome will hinge on the statute and be out of the control of the partnership which may result in consequences detrimental to the partnership. Therefore, a partnership agreement should be as comprehensive as possible.
As noted above, the Florida Revised Uniform Partnership Act provides default rules for whenever a partnership does not include a given situation or rule. All of the default rules provided by FRUPA can be contracted around in any comprehensive agreement. For example, you may contract as to how losses and profits will be shared among the partners. If a partner brings more capital into a venture, and wishes to receive more profits than the other partners, this should be included in the partnership agreement. FRUPA otherwise provides the default rule that profits and losses will be split evenly.
Another key issue that should be addressed in any comprehensive partnership agreement is each partner’s rights and duties. When in a partnership, each partner has certain levels of inherent authority to bind the partnership in certain actions. Section 401 of the Revised Uniform Partnership provides default rights and duties of each partner. Notably among these default rules is that each partner has equal rights in the management and conduct of the partnership business. Additionally, each partner, by default, may use or possess partnership property only on behalf of the partnership, and is required to reimburse partners for expenses paid out on behalf of the partnership.
These are but a few examples of how a partnership’s rules will default by statute. However, all default provisions of a partnership agreement can be contracted around by entering into a comprehensive and thorough partnership agreement. Therefore, it is in yours and your partnership’s best interest to have a partnership agreement to reference in any situation. Consulting an experienced legal team with years assisting partnerships and other small businesses can help you reach that goal. Call the Trembly Law Firm at (305) 431-5678 today to schedule your consultation.