I have seen quite a lot of questions/doubts and concerns here on http://answers.onstartups.com about partnerships. Splitting, percentages, responsibilities, legal obligations etc etc.
In my opinion it seems like a lot of people jump into partnerships without knowing the risks and benefits, pros and cons. Most of the time I assume is to avoid costs involving legal documents etc, sometimes just lack of knowledge about the consequences when things go wrong .
My questions are:
Please note and remember that all countries have different set of laws and rules, so please make of the answer a broad one so It can help and serve as a reference for future questions.
Thanks in advance
Partner Legal Partnership Partnerships
You've pretty well nailed why there is so many questions, doubts and concerns about partnerships. Money, power, success, and failure cause people to do massively unforeseen things within an otherwise healthy relationship.
Should you invest a great deal of yourself into a very complicated relationship without pre-defining as many parameters, rules, and guidelines as possible? Absolutely not.
CAN you do this without a lawyer? Sure. Do you have the time and expertise to learn the ins and outs of what makes a solid partnership agreement? Possibly. Is this forum a reliable place to get information that you'll bet your future on? No. Is a good, experienced lawyer in this area an invaluable consultant? For most all of us the answer is clearly yes. There's just too much at stake to responsibly do otherwise.
Looking from Sweden (where I live and work) the answer is yes, a contract is legally binding when all parties accept it - regardless of its form (formal contract/napkin/verbal contract).
The troubles are A) proving it after the fact if there is a disagreement [if verbal or the papers are lost] and B) making sure everything is covered by it.
IMHO I agree with your opinion and also I think that is the reason for needing a good contract from the start.
I work for a idea incubator and I have seen what can happen without a contract if the partner(s) decide they wish to split - in that case they worked if out ... but the contract should cover all sorts of what if?
It is also possible to try and get help from students studying law school either for cheap, since you know someone (that might know someone).
But at the end of the day, I believe that this should be drawn out together with a lawyer.
It is possible to create a legally binding partnership without a lawyer. It is possible to create a legally binding partnership without a document. It is possible to create a legally binding partnership without even realizing you have done so. The state will provide default rules where your partnership agreement (written or oral) is silent. They are probably not the rules you would pick.
If you're not going to pay the money to have a lawyer draft a partnership agreement for you, you need to take the time to educate yourself on business organizations in your state before you undertake to draft your own. Entire books are written on the subject of what should be included in a partnership agreement. The law can be complicated and present traps for the unwary. Unless you have a lot of free time, an experienced lawyer will do a better job for less than the opportunity cost of the time it would take you to do the job well.