District of Columbia Buy Sell Agreement Between Partners of a Partnership

• Category: Contracts - Buy Sell - Agreements
• State: Multi-State
• Control #: US-00443
• Format: Word; Rich Text

Description

The partners are engaged in a particular business and the purpose of this agreement is to provide for the sale by a partner during a partner's lifetime, or by a deceased partner's estate, of his interest in the partnership, and for the purchase of such interest by the partnership at a price fairly established; and to provide all or a substantial part of the funds for the purchase.

A Buy-Sell Agreement is an important legal document that outlines the terms and conditions under which a partner in a partnership can sell their ownership interest in the partnership. In the District of Columbia, the Buy-Sell Agreement between partners of a partnership is regulated under specific laws and regulations. A District of Columbia Buy-Sell Agreement Between Partners of a Partnership is a legally binding contract that typically includes clauses that protect the interests of both the selling partner and the remaining partners. It provides a framework for the fair valuation of the partnership interest, establishes the terms and conditions of the sale, and determines how the purchase price will be paid. There are different types of Buy-Sell Agreements commonly used in the District of Columbia. Some of them include: 1. Cross-purchase agreement: This type of agreement allows the remaining partners to buy the departing partner's share of the partnership interest. The remaining partners may purchase the interest individually or collectively. 2. Entity purchase agreement: Also known as a stock redemption agreement, this type of agreement allows the partnership itself to buy the departing partner's interest. The partnership uses its own funds to repurchase the interest. 3. Wait-and-see agreement: This type of agreement provides flexibility by allowing the remaining partners to choose between a cross-purchase or entity purchase agreement in the event of a partner's departure. The choice usually depends on the financial circumstances of the remaining partners and the partnership. 4. Hybrid agreement: A hybrid agreement combines elements of both a cross-purchase and entity purchase agreement. It provides flexibility by allowing certain partners to buy the interest while permitting the partnership itself to buy the interest of others. The District of Columbia Buy-Sell Agreement Between Partners of a Partnership may include various provisions to ensure fairness and protect the parties involved. Some important provisions commonly found in these agreements are: 1. Valuation provisions: The agreement should specify the method to determine the value of the partnership interest, such as using a predetermined formula or obtaining an independent appraisal. 2. Purchase price and payment terms: The agreement should outline how the purchase price will be calculated and the terms of payment, whether it will be a lump sum, installments, or through a promissory note. 3. Right of first refusal: This provision grants the remaining partners the first opportunity to purchase the selling partner's interest before it can be sold to a third party. 4. Non-competition and non-solicitation clauses: These clauses may restrict the selling partner from competing with the partnership or soliciting its customers after the sale. 5. Dispute resolution: The agreement should specify the method for resolving any disputes that may arise, such as through mediation or arbitration. It is crucial that partners consult with an attorney experienced in partnership law in the District of Columbia to draft or review the Buy-Sell Agreement to ensure compliance with the local laws and adequately protect their interests.

Law summary