Business Partnership: Agreement and Types of Partners

The partnership can be attributed to one of the most complex forms of business organization at both the managerial and legislative levels. The business partnership is the basis of success in a modern competitive environment. Thanks to the partnership, there is an opportunity for stable development and improvement. Joint work allows you to effectively use your own resources for successful projects that are most significant in a particular field of activity. Business partnership opens decent prospects for business while observing a set of rules and recommendations.

Partnership Business Definition

The business partnership is a voluntary agreement regulating the cooperation of parties planning to achieve a single goal or to fulfill the assigned task with the allocation of resources, responsibility, possible risks, and profits. The business partnership involves different types of interaction. At the same time, partners from the point of view of business strategy are motivated for joint cooperation and interaction. They are interdependent in solving a certain task, a problem while realizing their own autonomy. The business partnership model is built on changing the socio-economic status of partners among themselves, or a certain hierarchy of power is established. With the business partnership, interaction is built on horizontal relationships.

Forming a partnership implies common economic activity. The basic role is played by a contract that regulates the obligations and rights of partners, their role in income, the division of property, the distribution of profits. Each partner should contribute. The contribution can be business reputation, business connections, professional knowledge, property, skills, and abilities. A partner can be a limited, general, junior, senior. The general partner (in general partnership) has unlimited responsibility for all duties. That is, there is no limit on the losses that a person can incur. The limited partner (in limited liability partnership) has a limited liability (within the limits of the deposit).

Types of Business Partnership

It is possible to underline the following type of partnership.

  • Forced partnership. This option of cooperation is due to external circumstances; its development is possible even against the wishes of the participants.
  • Initiative business partnership as a result of the desire of the participants to unite their efforts.
  • The competitive partnership is the cooperation of competing economic operators. In the framework of this interaction, competition, mutual assistance, cooperation, and the corresponding interaction of the parties are combined.
  • The non-competitive partnership is cooperation between economic entities that do not compete with each other. The basis of such interaction is joint economic activity, mutual assistance, mutual assistance, and elements of competition are possible.
  • The tactical partnership is a short business partnership aimed at achieving certain close goals, with the solution of tasks.
  • The strategic partnership is a stable long-term partnership. Strategic objectives within the framework of this partnership have advantages against the background of momentary benefits.

Types of Partners in a Business Partnership

The term business partner refers to an entrepreneur (company) with which another organization starts a certain union or a cooperation agreement was concluded. The relations between the parties can be strengthened by a contract with the strict prescription of specific rules or norms of conduct of the parties. A business partner can be a customer or a consumer; executor (contractor) or supplier; intermediary in the general sales chain (in particular, the distributor or regional representative); producer of complementary services and goods.

Business Partnership Agreement

The cooperation agreement is the universal form of documenting business relationships. Very often there are agreements on cooperation, in which there are not two partner sides, but three or more. The cooperation agreement is signed to achieve the same goals for all parties. According to its conditions, each of them fulfills its role in the process of cooperation. As a rule, the goal is to make money.

For example, all signatories of this document want to increase the number of their assets,

  • but only one of the parties is responsible for funding,
  • the second is responsible for the production,
  • the third is responsible for transport support,
  • the fourth party is engaged in advertising.

Taking into account this difference of this agreement from other types of contracts, there are several obligatory moments. The responsibility of each partner has its own unique conditions. This means that duties, responsibilities, equity participation should be prescribed for each party separately.

Each partner must have a list of duties that he must perform. Based on the nature of duties, responsibility for non-fulfillment is formed. Responsibility also cannot be common for all parties to the agreement. For everyone, there should be a list of penalties.

Particular attention should be given to fixing the property, which the parties put into the project in the text of the document. All this property must have a monetary equivalent, which must be registered in the body of the contract.

In addition, it is necessary to clearly identify for each participant what is the profit for him. It is not always money in their literal manifestation. Perhaps for full performance of duties, the participant receives services from other parties, for example, the organization of an advertising company. The profit of the party must be expressed in a specific amount (must have its own value). Based on this, the party that has not received the promised bonuses from the partners has the right to defend the reimbursement of their price in court.

Types of Partnerships

  1. A general partnership;
  2. A limited partnership;
  3. A limited liability partnership.

With the right approach to partnership, it will be possible to achieve excellent results in commercial and non-commercial activities, so that by starting to study the foundations for a quality and effective partnership, it will be possible to achieve excellent performance and gain benefits, as well as provide beneficial cooperation terms to partners.