Clients sometimes come to me to discuss “partnerships” they want to enter into with other parties. I try to dissuade people from using the term “partnership,” because it has legal implications. Technically, a partnership is an association of two or more persons engaged in a business enterprise in which the profits and losses are shared proportionally. The legal definition of a partnership is generally stated as “an association of two or more persons to carry on as co-owners of a business for profit.”
There may be some instances in which the parties actually desire to form a new enterprise, but more often, they just want to team up with another company to pursue an opportunity.
Alternatives to the word “partnership” include Strategic Alliance or Teaming Agreements, which can be drafted to clearly define the relationship and each party’s roles and responsibilities. A future post will discuss some of the important provisions in the Strategic Alliance/Teaming Agreement.
I spoke to the Women’s Business Enterprise Council West (WBEC-West) on “Legal Aspects of Strategic Partnerships.” I tried to make my presentation thrilling so as not to put anyone to sleep, but the truth is, some legal topics are just a little dry. . .