Clause guide
Partnership Clause clause: meaning, risks, and what to negotiate
Addresses whether the relationship should be treated as a partnership or similar joint business arrangement.
What it means
If a contract accidentally suggests a partnership, that can create tax, liability, and fiduciary risks that neither side intended.
Common risks
- • The relationship may be argued to be a partnership.
- • One party may be exposed to shared liabilities.
- • The wording may conflict with the actual commercial setup.
What to check before signing
- • Does the contract expressly say no partnership is created?
- • Are profit-sharing or control rights described in a way that implies partnership?
- • Does the clause align with the rest of the agreement?
Negotiation ideas
- • Add a clear no-partnership statement.
- • Avoid language suggesting shared ownership or shared management unless intended.
- • Keep roles and responsibilities commercially separate.
Example clause
“The parties are independent contractors, and nothing in this Agreement shall be deemed to create a partnership, joint venture, or fiduciary relationship between them.”
Frequently asked questions
Why does a partnership clause matter?
Because accidental partnership language can create legal and financial obligations neither party expected.
Related clauses
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