Partnership Agreement in Canada: Template and Key Clauses (2026)

A partnership agreement in Canada is the contract between two or more people or businesses who run a business together and share its profits. Without one, the partners are still a partnership in law, but the terms are set by the provincial partnership statute, which may not match what the partners actually want. A written agreement lets the partners decide for themselves how profits are split, how decisions are made, what each partner must contribute, and how someone leaves. It is the document that keeps a working partnership from turning into a dispute. This is general information, not legal advice. Partnership law is set at the provincial level in Canada, and the rules differ by province, so confirm the current position before relying on a clause. ## Which law governs Each common-law province has its own Partnership Act that defines what a partnership is, the duties partners owe each other, and the default rules that apply when the partners have not agreed otherwise. Quebec deals with partnerships under its Civil Code. These default rules are often unwelcome surprises: for example, in a general partnership each partner can be personally liable for the whole of the firm's debts. Canadian law also recognises limited partnerships and, for certain professions, limited liability partnerships, which change how liability works. A written agreement lets the partners replace the defaults they do not want. <!-- [VERIFY] correct name of the applicable Partnership Act for the relevant province before citing it --> ## A clause by clause skeleton Use this as a structure to adapt, not a finished document. ``` PARTNERSHIP AGREEMENT Parties: [each Partner] Date: [date] 1. FORMATION AND NAME The Partners carry on business together as [firm name] from [date]. The type is a [general / limited / limited liability] partnership. 2. BUSINESS The business of the partnership is [description]. 3. CAPITAL CONTRIBUTIONS Each Partner contributes as set out in Schedule 1 (cash, property or services) and holds the capital account recorded there. 4. PROFIT AND LOSS SHARING Profits and losses are shared [equally / in the proportions in Schedule 1]. Drawings are allowed up to [limit]. 5. MANAGEMENT AND DECISIONS Day to day decisions are made by [all partners / a managing partner]. Major decisions listed in clause [x] need [unanimous / majority] approval. 6. PARTNER DUTIES Each Partner devotes [full / agreed] time, acts in good faith, and does not compete with the firm. 7. BANKING AND ACCOUNTS How the firm banks, who may sign, and how accounts are kept and approved. 8. ADMISSION OF PARTNERS A new partner joins only with [unanimous / majority] approval and on agreed terms. 9. RETIREMENT, DEATH AND EXPULSION How a partner leaves, how the share is valued and paid out, and when a partner may be expelled. 10. DISSOLUTION When and how the partnership ends, and how assets and liabilities are distributed. 11. DISPUTES AND GOVERNING LAW Governed by the laws of [province]. Disputes resolved by [mediation then arbitration / the courts of [province]]. Schedule 1: Contributions and profit shares

- **Registration.** Limited partnerships and limited liability partnerships must usually be registered provincially to get their status; a business name may also need registering.
- **Professions.** LLPs are often restricted to certain professions; check whether your business qualifies.
- **Quebec.** Quebec partnerships follow the Civil Code and differ from the common-law provinces. ## Common mistakes to avoid - No written agreement, so the provincial default rules apply, including equal profit sharing and personal liability.
- No exit clause, so a partner leaving or dying forces the whole firm to dissolve.
- No valuation method for a departing partner's share, leaving the payout to argument.
- Silence on decision-making, so it is unclear which decisions need everyone to agree.
- Assuming the partnership limits personal liability when it is actually a general partnership. ## Keeping the agreement and the firm's records together A partnership agreement is a living document. Partners join and leave, capital accounts and profit shares change, and the agreement has to stay in step with the firm's registrations and accounts. When the agreement and these records live in separate places, it becomes unclear who is a partner, on what share, and what was agreed about an exit. Drafting a partnership agreement, reviewing a profit-share or exit clause, editing a term in plain language and holding every version with its date in one view can live in a single AI workspace tuned to how your firm works. Adira is built around that workspace, running on Claude, with per-seat pricing shown up front and a 7-day trial, India-first and built to work across jurisdictions. You can read more at [adiralaw.com](https://adiralaw.com). For a simple two-partner firm the skeleton above is enough on its own. The point worth keeping is that a partnership runs more smoothly when the agreement, the capital accounts and the registrations stay together and current.