A business agreement is a legal and official document which clearly spells out the portions confirmed for each member who are interested in striking up a deal. The deal is essentially related to business wherein the members wish to form a valid partnership to create a business. Since making an entrepreneurial venture demands use of immense psychological as well as physical power expressed in the members’ motivational level and ability to make monetary investments, the agreement must have a written record of the contributions and consequent duties and responsibilities ascribed for each party. This would serve the following important functions:
- All doubts and differences stemming from oral promises would be smoothened invariably once these promises are packed in encoded documents.
- The duties would be laid down in fixed terms which would help the parties to remember what they have been signed for and what level of expectations to achieve subsequently.
- The court may be reached by a party in the wake of illegal acts or illegitimate considerations with the signed papers as respectable proof to evince the unlawfulness of the act committed by the other party.
- Since it is almost impossible to commit the guidelines of an agreement to memory, a written adaptation of the same is considered more productive.
The partnership terms occupy a huge place of concern in this regard as both the business parties must agree to the terms before becoming business associates in the eye of law. The agreement should clearly formulate the basic information like name, address and date. Furthermore, it should point out the roles to be played by the individual parties, the tenure of association besides the laws governing extension and termination of association, the initial contributions to be made by the parties as well as the resultant profits and shares that they would be entitled to, the acts under which the agreement is drawn, the rules prescribed by the concerned state related to the execution of the terms, the passive and the compelling ways of resolution of disputes and overall management of business.
All these terms should be unequivocally drafted in the document and then sent for review by an advocate or attorney for necessary amendments. Once it is done, the papers may be signed by the parties with the date to record the day and time on which the deal was sealed. It must be ensured by all means that the agreement is unanimously made.