Silent Partnership Agreement

A written agreement is a type of contract.

Running your own business can mean a lot of unpaid hours and dipping into your savings. Perhaps, your company generates enough income, but you need some added financing to take your business to the next level. A silent partner might be just what you need.

Partnership

A partnership is when two or more people agree to collaborate on a business together. Partnerships take different forms, and partners can bring different things to the table, such as money or expertise. This type of partnership is referred to as a general partnership, where each partners shares in the profits, risks, liabilities and ownership of the company.

Silent Partnership

A silent partner usually brings in a substantial financial investment. He does not participate in the day-to-day operations of the company.

Silent Partnership Agreement

A silent partnership agreement is an agreement between two or more parties in which one party agrees to stay out of the daily running of the business. To avoid possible future confusion, this agreement should be written down, often in the form of a letter. The agreement should specifically state the duties of each partner. If one partner is supposed to provide financing, this should be written into the agreement. The agreement outlines partner contributions, profit-sharing, liabilities, duties and explicitly states that one or more particular partners will maintain a "hands off" approach when it comes to running the business.

References

• Rocket Lawyer: Partnership Agreements
• Quick MBA: General Partnership
• AllBusiness: Letter of Agreements