title: author: publisher: isbn10 | asin: print isbn13: ebook isbn13: language: subject publication date: lcc: ddc: subject: Page aa Page i The Partnership Book How to Write a Partnership Agreement: Fifth Edition By Attorneys Denis Clifford & Ralph Warner Page ii Disclaimer: This netLibrary eBook does not include the ancillary media that was packaged with the original printed version of the book. Your Responsibility When Using a Self-Help Law Book We've done our best to give you useful and accurate information in this book. But laws and procedures change frequently and are subject to differing interpretations. If you want legal advice backed by a guarantee, see a lawyer. If you use this book, it's your responsibility to make sure that the facts and general advice contained in it are applicable to your situation. Keeping Up to Date To keep its books up to date, Nolo Press issues new printings and new editions periodically. New printings reflect minor legal changes and technical corrections. New editions contain major legal changes, major text additions or major reorganizations. To find out if a later printing or edition of any Nolo book is available, call Nolo Press at 510-549-1976 or check the catalog in the Nolo News, our quarterly publication. You can also contact us on the Internet at www.nolo.com. To stay current, follow the "Update" service in the Nolo News. You can get a free one-year subscription by sending us the registration card in the back of the book. In another effort to help you use Nolo's latest materials, we offer a 25% discount off the purchase of the new edition of your Nolo book if you turn in the cover of an earlier edition. (See the "Special Upgrade Offer" in the back of this book.) This book was last revised in March 1997. Fifth EditionMARCH 1997 CoverTONI IHARA Design Book DesignTERRI HEARSH IndexJANE MEYERHOFER ProofreadingLARA CARTWRIGHT PrintingBERTELSMANN INDUSTRY SERVICES, INC. Clifford, Denis. The partnership book : how to write a partnership agreement / by Denis Clifford & Ralph Warner. 5th ed. p. cm. Includes index. ISBN 0-87337-371-5 1. PartnershipUnited StatesPopular works. 2. Articles of partnershipUnited StatesPopular works. I. Warner, Ralph E. II. Title. KF1375.Z9C55 1996 346.73'0682 [347.306682]DC20 96- 8280 CIP Copyright © 1981, 1984, 1987, 1991 and 1997 by Denis Clifford and Ralph Warner. All rights reserved. Printed in the USA. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without the prior written permission of the publisher and the authors. Reproduction prohibitions do not apply to the forms contained in this product when reproduced for personal use. For information on bulk purchases or corporate premium sales, please contact the Special Sales Department. For academic sales or textbook adoptions, ask for Academic Sales. Call 800-955-4775 or write to Nolo Press, Inc., 950 Parker Street, Berkeley, CA 94710. Page iii Acknowledgments Putting together this Fifth Edition of The Partnership Book was a surprisingly big, and humbling, job. Without the help of many people, we would have produced a less thorough and less readable book, and had much less fun preparing it. So our gratitude and thanks to the following friends: First, we want to express our deep appreciation for the labors of Terri Hearsh, who laid out the manuscript with professional skill and a keen editor's eye. Next, to Kit Duane, an excellent editor, superb writer and great friend. Moving on, several lawyer friends and partnership experts who graciously gave us considerable time to discuss what they (and we) have learned about partnerships: Lawrence A. Baskin, of Krause & Baskin, San Rafael, California; Ted Lyman and Dick Duane, of Duane, Lyman & Seltzer, Berkeley, California; Hayden Curry, Oakland, California; Marvin Cherrin, Oakland, California; Tom Fike, Oakland, California; and Steve Antler, Fort Bragg, California. And several business friends who also greatly aided us in updating our understanding of partnerships: Ray Castor, Carla Jupiter, Steve Clifford and Carol Kizziah. Also of great help have been the many thoughtful readers who've written us of their experiences forming partnerships. We've used many of these readers' suggestions to expand and deepen our coverage of partnership concerns in this edition. Next, we want to thank our wonderful gang at Nolo Press, a truly unique place to work. Even though we've grown too large to acknowledge the names of each of Nolo's over seventy employees, each one is part of the Nolo family and contributes to making Nolo work. Collectively, they make it possible for us to bring you this book. In addition, we want to specifically thank a few Noloids who personally assisted with the editing and preparation of previous editions of the manuscript: Stephanie Harolde, Tony Mancuso, Barbara Hodovon and Ann Heron. Finally, we want to express our continued appreciation to those who helped us on previous editions: Bill Petrocelli, Marilyn Putnam, Brad Bunin, Patti Unterman, Chris Cunningham, Christie Rigg, Walter Warner, John Larimore and two partnership experts for suggestions for improvements to the second editionRoger Pritchard, a Berkeley, California small business advisor, and Attorney Elisse Brown of Oakland. And maniacal thanks to our favorite sharp-penciled accountants: Margot Miller, of San Francisco, tax expert for small business owners; Bernard "Bear" Kamoroff, author of Small-Time Operator; and Malcolm Roberts, Berkeley, another tax wiz.