Can a society exist without a social contract?
July 20, 2022 | 40,00 EUR | answered by Otto König
Dear Corporate Lawyer,
I have an urgent question regarding my company. Some time ago, I founded a company together with a partner, but we did not draft a written partnership agreement. Now I have doubts whether our company is legally valid at all, as we have not established clear rules and agreements.
The situation is as follows: My partner and I founded the company two years ago and have been working together as shareholders since then. We verbally agreed on various points, but nothing has been documented in writing. Now I am concerned that this could lead to problems, especially in case of disagreements or in the event of a possible dissolution of the company.
My main concerns are that without a partnership agreement, we have not established clear rules for management, profit distribution, decision-making processes, and other important aspects. This could potentially lead to disagreements and legal disputes in case of serious issues.
Therefore, my question to you is: Can a company exist and have legal validity without a written partnership agreement? If not, what steps should we take now to legally secure our company and minimize any risks?
Thank you in advance for your help and advice.
Sincerely,
Sandra Wittkopf
Dear Mrs. Wittkopf,
Thank you for your inquiry regarding your company situation. It is understandable that you are concerned, as a lack of a written partnership agreement can indeed lead to legal uncertainties. A partnership agreement is an essential document to clearly and unambiguously regulate the relationship between partners and thus avoid conflicts.
First and foremost, it is important to emphasize that a partnership can exist even without a written agreement. An oral agreement or implicit actions can serve as the basis for a partnership. However, as you have already mentioned, this carries certain risks, as in case of disputes or a possible dissolution of the partnership, the exact regulations are not clearly defined.
To legally secure your partnership and minimize potential risks, I strongly recommend creating a written partnership agreement. This agreement should clearly and unambiguously outline all important aspects such as management, profit distribution, decision-making processes, liability regulations, dissolution arrangements, etc. This not only serves to avoid conflicts, but also to protect the interests of all parties involved.
It is advisable to seek assistance from an experienced attorney specializing in partnership law to ensure that the agreement covers all relevant points and is legally sound. The attorney can also help you document existing oral agreements and integrate them into the written contract.
In summary, while it is possible to run a partnership without a written agreement, this carries certain risks. To legally secure your partnership and avoid conflicts, I recommend creating a written partnership agreement with the help of an experienced attorney.
I hope that my explanations are helpful to you and I am available for any further questions.
Sincerely,
Otto König
Attorney specializing in partnership law
