I am about to purchase a boat with some friends and in the interest of everlasting friendship we would like to have a written partnership agreement. Does anyone have any thoughts or samples that I could use to craft my own? Much thanks. scott sprovinse@hotmail.com
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Frank Gazzano
Pre-written
Have you checked any of the web sites or stores that sell the generic types of pre-written legal documents?
Have you checked any of the web sites or stores that sell the generic types of pre-written legal documents?
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Ed Schenck
See archives.
There is lots of information in the Forum Archives. The "Related Link" below is just one. Good luck.
There is lots of information in the Forum Archives. The "Related Link" below is just one. Good luck.
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Ron
For Ever Lasting Friendship....
buy your own boat and take them out once in a while. I would much rather be the sole owner of a 20 footer than a partner in a 45.... Just my opinion, but if you've already decided, I wish you luck... Ron/KA5HZV
buy your own boat and take them out once in a while. I would much rather be the sole owner of a 20 footer than a partner in a 45.... Just my opinion, but if you've already decided, I wish you luck... Ron/KA5HZV
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Ken Cobb
Attorney advice
Whatever form you use, it had best cover these issues: How will partners handle it if one wants to exit? Will the others have to buy him out at a formula price, and if they refuse, will the boat then be sold? How will decisions be made about whether to do various repairs or upgrades? How will the allocation of weekends and dates be handled? What will count as damage, repairable at the damager's cost, and what will be regarded as normal wear and tear, repairable at the cost of the whole partnership? Who will prepare the partnership tax return? How will it be handled if one partner is slow to pay his share of costs for things? What if a partner marries, or divorces? Will his wife or ex-wife become a partner in the boat, or will a buy-out provision take care of that? Or what if a partner dies, and his heirs or estate becomes a part owner in the boat? Now let me tell you the downside of failing to have a written partnership agreement to cover these issues. An aggrieved partner's only remedy is to bring a partition suit to have the boat sold, and the litigation costs of doing that are almost certainly going to be higher than the value of the partner's share of the boat.
Whatever form you use, it had best cover these issues: How will partners handle it if one wants to exit? Will the others have to buy him out at a formula price, and if they refuse, will the boat then be sold? How will decisions be made about whether to do various repairs or upgrades? How will the allocation of weekends and dates be handled? What will count as damage, repairable at the damager's cost, and what will be regarded as normal wear and tear, repairable at the cost of the whole partnership? Who will prepare the partnership tax return? How will it be handled if one partner is slow to pay his share of costs for things? What if a partner marries, or divorces? Will his wife or ex-wife become a partner in the boat, or will a buy-out provision take care of that? Or what if a partner dies, and his heirs or estate becomes a part owner in the boat? Now let me tell you the downside of failing to have a written partnership agreement to cover these issues. An aggrieved partner's only remedy is to bring a partition suit to have the boat sold, and the litigation costs of doing that are almost certainly going to be higher than the value of the partner's share of the boat.
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Bob
Agreement Schmeement
Boy Ken, take all the fun out of something enjoyable. My wife and I have been in a partnership with one other person for three years and nothing in in writing. We agreed upon alot of things up front. It has been one of the most pleasurable experiences yet. We get one vote, he gets one. We split expenses 50/50 and have yet to have any type of disagreement. We bought the boat new (320). Even WITH an agreement, you can get into all kinds of messes, they then just become legal ones. Trust your instincts and talk ALOT between yourselves about what your expectations are of each other and how you'll handle grievances, expenses, etc. and THEN decide if you need something formal. It's not like you're buying a business. You're trying to escape the rat race, not create more chaos. Maybe by talking thru everything, you'll find out if it's even wise to do this with these individuals, contract or not. Try it out and see how it works. Try to touch on all of the good, the bad and the ugly. Boats require alot of TLC and $'s, but can also be the most enjoyable part of your life. Good luck in your decision.
Boy Ken, take all the fun out of something enjoyable. My wife and I have been in a partnership with one other person for three years and nothing in in writing. We agreed upon alot of things up front. It has been one of the most pleasurable experiences yet. We get one vote, he gets one. We split expenses 50/50 and have yet to have any type of disagreement. We bought the boat new (320). Even WITH an agreement, you can get into all kinds of messes, they then just become legal ones. Trust your instincts and talk ALOT between yourselves about what your expectations are of each other and how you'll handle grievances, expenses, etc. and THEN decide if you need something formal. It's not like you're buying a business. You're trying to escape the rat race, not create more chaos. Maybe by talking thru everything, you'll find out if it's even wise to do this with these individuals, contract or not. Try it out and see how it works. Try to touch on all of the good, the bad and the ugly. Boats require alot of TLC and $'s, but can also be the most enjoyable part of your life. Good luck in your decision.
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Dan
Agreements
Bob, It's great that you are able to have a working partnership with just a handshake. You have an advantage in that your boat is still fairly new and the major expenses are still sometime away. And let's face it, most partnerships work as long as they either make money or create enjoyment. It's when they start costing money that the problems occur. Ken provided some great advice. And as someone who has partnered on things from real estate deals to airplanes (not the boat), he has hit the major points that need to be covered. In fact he hit it right on. If someone uses his checklist and carries out the discussions beforehand, the surprises will be much easier to handle. We added another clause to our partnerships also, it said something like we all agree to approach problems with the idea of creating thoughful solutions in a spirit of friendship. Believe it or not, that one was more helpful a few times than one might expect. Not because you could get sued if you didn't, but just because it was a pre-agreed posture for dealing with problems. Dan Jonas (S/V Feije II)
Bob, It's great that you are able to have a working partnership with just a handshake. You have an advantage in that your boat is still fairly new and the major expenses are still sometime away. And let's face it, most partnerships work as long as they either make money or create enjoyment. It's when they start costing money that the problems occur. Ken provided some great advice. And as someone who has partnered on things from real estate deals to airplanes (not the boat), he has hit the major points that need to be covered. In fact he hit it right on. If someone uses his checklist and carries out the discussions beforehand, the surprises will be much easier to handle. We added another clause to our partnerships also, it said something like we all agree to approach problems with the idea of creating thoughful solutions in a spirit of friendship. Believe it or not, that one was more helpful a few times than one might expect. Not because you could get sued if you didn't, but just because it was a pre-agreed posture for dealing with problems. Dan Jonas (S/V Feije II)
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Bob Todd
The best way to ruin a friendship...
...is to turn it into a partnership. I've seen many times and only a tiny fraction succeed. Too many bad points to list. Cheers, Bob
...is to turn it into a partnership. I've seen many times and only a tiny fraction succeed. Too many bad points to list. Cheers, Bob
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Ray Bowles
Everlasting friendships and partnerships are
self cancelling. Partnerships with only 2 partners can be defined rather easily as long as both are single individuals. Adding spouses adds problems. Sadly, since better than 50% of all marriages end in failure, you now see the start of the odds rising against your partnership working. Adding 3,4 or more parties (single or couples)increase the odds of failure. Done at business levels these do work out. Spendy, yet lasting. At family or friendship levels they are usually expensive lessons about total lack of communication. Confronting problems such as abuse, overuse, what to fix, what to buy and lastly "who did it?!" lead into problems that most small groups have no ability to resolve. Without group sessions with all present to review these issues you will end up with cliques judging other cliques. Now throw in spouses that might have different ideas of where the family vacation monies should be spent. A smaller day sailer that will handle your family might be the best and easiest answer for your family. Now if you are the only one of your family that will be in this venture then the question is: 1. Can my family afford this venture should this group fall apart and I must spend more to reclaim my investment? or: 2. Would a club boat work as well to satisify my need to sail? Ray S/V Speedy
self cancelling. Partnerships with only 2 partners can be defined rather easily as long as both are single individuals. Adding spouses adds problems. Sadly, since better than 50% of all marriages end in failure, you now see the start of the odds rising against your partnership working. Adding 3,4 or more parties (single or couples)increase the odds of failure. Done at business levels these do work out. Spendy, yet lasting. At family or friendship levels they are usually expensive lessons about total lack of communication. Confronting problems such as abuse, overuse, what to fix, what to buy and lastly "who did it?!" lead into problems that most small groups have no ability to resolve. Without group sessions with all present to review these issues you will end up with cliques judging other cliques. Now throw in spouses that might have different ideas of where the family vacation monies should be spent. A smaller day sailer that will handle your family might be the best and easiest answer for your family. Now if you are the only one of your family that will be in this venture then the question is: 1. Can my family afford this venture should this group fall apart and I must spend more to reclaim my investment? or: 2. Would a club boat work as well to satisify my need to sail? Ray S/V Speedy
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Ken Cobb
attorney postcript
My father was in two successful long-term business partnerships each with only one other partner, and he always contended that the hard work of discussing and executing a good partnership agreement up front was the key to their success. Dan's idea of adding a "friendship spirit" clause is also helpful. The greatest threat to his partnerships was the wives, who kibitzed about how this or that was unfair to one of the partners. Bob's idea that two people operating in good faith can get by with a handshake is wonderful between two compatible people of good will, but even two such people could run into disagreements about how to handle the boat. If you are going to rely on a handshake, postpone that handshake until after you have had a thorough heart-to-heart talk about possible boat contingencies. You may discover that you aren't on the same page after all, and the boat purchase may have to be abandoned.
My father was in two successful long-term business partnerships each with only one other partner, and he always contended that the hard work of discussing and executing a good partnership agreement up front was the key to their success. Dan's idea of adding a "friendship spirit" clause is also helpful. The greatest threat to his partnerships was the wives, who kibitzed about how this or that was unfair to one of the partners. Bob's idea that two people operating in good faith can get by with a handshake is wonderful between two compatible people of good will, but even two such people could run into disagreements about how to handle the boat. If you are going to rely on a handshake, postpone that handshake until after you have had a thorough heart-to-heart talk about possible boat contingencies. You may discover that you aren't on the same page after all, and the boat purchase may have to be abandoned.
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jim
partnership
A few years ago I entered into a partnership with a very good friend. WE developed a formula for use based on the boats value done as "common shares" where the owner with majority shares had a greater number of uses. the partner with the lesser shares had the number of free trips worked out. If the free trips were exceeded, then the minority partner paid going charter rate to the majority owner. Specific cost sharing arrangements were worked pout beforehand, as well as what was covered in maintance and buy out options. '
A few years ago I entered into a partnership with a very good friend. WE developed a formula for use based on the boats value done as "common shares" where the owner with majority shares had a greater number of uses. the partner with the lesser shares had the number of free trips worked out. If the free trips were exceeded, then the minority partner paid going charter rate to the majority owner. Specific cost sharing arrangements were worked pout beforehand, as well as what was covered in maintance and buy out options. '
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