Speaker 1: Welcome again to YouWhoLegal. How do I create a great partnership agreement that protects me in case any controversy arise with my partner? Let's look. Welcome again to YouWhoLegal channel. If this is the first time you're watching, my name is Gisela Llana. I am an attorney in the United States. In this space, we talk about legal topics that are relevant to business owners, entrepreneurs, and creators. So let's dive into partnership agreements. Okay. Entering into a partnership agreement, it's an exciting venture, but it also comes with potential pitfalls, especially if disagreements arise. That's why a well-drafted partnership agreement can serve as a solid foundation to mitigate conflicts and ensure a smooth working relationship. So by clearly outlining rights, responsibilities, and any other important factors that will help you manage your partnership, then you're preparing the road for a good relationship and to know how to manage things if something doesn't go as expected. The idea is that each partner have a clear idea of their duties and their rights, their strengths, their expertise, and they know from the beginning what to expect from the partnership. So the idea is that regularly there are defined roles of the partnership, who is going to do what, what is going to be each partner's contribution, what is their added value. And even before the partnership agreement, it's important to have a conversation to ask each partner what is expected and how you want to handle things. For instance, making decisions. A solid partnership agreement should outline how decisions will be made. Establishing a framework for decision-making can prevent each partner from feeling marginalized or overridden by the other. This could involve outlining specific procedures for reaching consensus, specific procedures for a third-party mediation if there are any disagreements, maybe having not two but three partners, one who can deal with any controversies if the two of them do not agree on certain things. So, as I told you, first, define rights and responsibilities, second, roles of each partner and contributions, three, how are you going to handle the decision-making process, or it's also important to consider how each partner is going to benefit from the partnership. This means defining what is going to be the income that will be perceived from the partnership because usually partnerships are entered into to create profit, to develop a business venture, and from there receive any economic benefits, right? So, we want to know not only what are we going to give but also what are we going to take from the partnership. It's also important to have termination clauses or exit clauses or contractual specifications regarding how you can terminate the partnership and what's going to happen with whatever profit has been created, what's going to happen with any assets that have been contributed to the partnership. It's very important then to define any exit strategy and termination conditions, right? How do we terminate this partnership if things don't go as expected? And usually partnerships are used as preliminary steps before creating something more formal, more structured in terms of a business project. So, first, usually what happens is that you create a partnership which is in some way flexible and then if things go good, if things are working out, then you go forward with creating something more structured like an LLC or a corporation. So, roles and responsibilities, right? Rights of each partner, decision process, distribution of profits, termination clauses. And finally, it's important to understand that as long as a partnership exists, both parties will respond with all their assets. So, it's important to decide from the beginning if you are going to be involved in this partnership as an individual, which means that all your assets respond for any debts or responsibilities that come out of the partnership, or if you're going to participate in the partnership as an LLC or a corporation of one person, right? And the other person, your partner, may also do the same. And then you can have a partnership of two or more LLCs or corporations. Why? Because the partnership is a good idea from a flexible point of view, from flexibility, but it may be very risky from a responsibility point of view. Now, these are just a few points that you should consider. First, rights. Second, responsibilities. Third, roles or decision-making process. Five, distribution of profits and benefits. Six, termination clauses. And seven, how is each partner going to be involved as a person or as an entity. And this will help you draft a good partnership agreement. Of course, there are other details that will be important. And if you want legal counsel regarding how to create an effective partnership agreement, don't forget that you can reach out or leave comments. And I will see you in the next video. My name is Giselle Ayala. Bye-bye. Bye-bye.