Don’t Build a Business
On a Handshake

All 'major decisions' require unanimous consent of both partners — but 'major decisions' is never defined. Either partner can veto anything by claiming it's major. There's no tiebreaker, no mediation requirement, and no buyout mechanism. If you and your partner disagree on a hiring decision, a vendor, or a strategic pivot, the business stops. This is the single most common reason partnerships fail — and this agreement guarantees it.

There is no mechanism for one partner to exit, sell their interest, or force a buyout. If you want to leave after 3 years, or if your partner stops contributing but still owns 50%, there's no process to resolve it. No valuation formula, no right of first refusal, no shotgun clause. You either keep working together indefinitely or dissolve the entire business — including the parts that are working.

Profits are distributed 'in proportion to each partner's capital contribution' — but the agreement doesn't define how contributions are tracked or valued. You put in $50K cash, your partner puts in 'sweat equity' worth who-knows-what. In year 3, when both of you feel you've contributed more than the other, there's no formula to resolve it — just an argument waiting to happen.

The non-compete bars partners from 'engaging in any business competitive with the Partnership' for 3 years after leaving — regardless of why you left. If you're voted out against your will, you still can't start a competing business or work in your industry for 3 years. This is your expertise and livelihood — and the agreement takes it away even if the breakup wasn't your fault.

The partnership can issue capital calls 'as needed for operations and growth' with 10 days notice and no annual cap. If the business hits a rough patch, you could be required to contribute another $20K, $50K, or $100K on short notice — or risk dilution of your ownership. For a partnership you joined expecting a $50K commitment, this turns your investment into an open checkbook.

All disputes must be resolved through arbitration in the county where the partnership was formed — which happens to be your partner's hometown, 2,000 miles from where you live. You'd need to hire local counsel, travel for hearings, and litigate under unfamiliar state law. For a 50/50 partnership, dispute resolution should be in a neutral forum — not one partner's backyard.