An Overview on Silent Partnership Agreement

Silent partnership agreement is crucial to run a joint venture smoothly:

Silent partnership agreement is basically a legal agreement between two or more people who enter into a joint venture but in a silent partnership the responsibilities of partners are different from each other. In the silent partnership, the silent partner usually provides finances and stays away from the day to day working of the business while the other partner or partners manage to run the daily affairs of the business. The silent partner do not participate in daily management affairs as he is not responsible for the running of the business but shares the profit or loss according to the pre-determined ratio.

The only responsibility of a silent partner is to provide financial investment to a joint venture while the other partner or partners take the responsibility to run the business by managing the daily affairs of the joint venture. While doing a silent partnership in South Africa, it is highly recommended to draft a silent partnership agreement which will help in the smooth run of the joint business and will also assist in resolving the disputes or misunderstandings that may arise in the course of the business.

Legal importance of silent partnership agreement in South Africa: While running a joint venture in South Africa in which a silent partner is involved, drafting and signing a silent partnership agreement becomes very important. It comes under the South African Companies Act, 1973. This partnership contract helps all partners involved in a silent partnership to determine the duties or responsibilities of each partner and also to define the procedures to resolve the disputes in this partnership in a mutually agreed fashion without going to the court. This silent partnership agreement is drafted by the mutual consent of all partners and helps them to run the business without experiencing any sort of disapproving situation. This agreement clearly states the responsibilities of the silent partner that he is supposed to provide financial investment and the other partner will work hard while participating in the managerial duties and will tackle day to day affairs to run the business. With the help of this silent partnership agreement, all partners will be able to resolve their disputes easily in a peaceful manner instead of going to the court in South Africa. This silent partnership agreement is comprised on the following major points.

Name of Business

Location or physical address of business

Nature or the business

Contributionsfrom partners (time, money, property etc)

Profit/loss sharing ratio

Responsibilities of all partners (silent and others)

Decision making

Termination of the agreement

In a country like South Africa, it is very important to draft a silent partnership agreement which plays a vital role in the smooth sailing of a joint venture and helps all parties to resolve their conflicts rather easily.

Net Lawman are adept in providing all kinds of silent partnership agreement templates which are highly beneficial for people who are going to start a silent partnership as these templates are drafted in a comprehensive and easy way in plain English which can be edited easily according to the requirements of people.

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