How to review a partnership agreement

A partnership agreement governs how partners contribute, share profits, make decisions and leave. Without one, the state's default partnership statute decides, and those defaults rarely match what the partners expected. This checklist covers general partnerships, limited partnerships and LLPs under US law, and how to review the agreement in Word with LexDraft.

Last checked: 17 October 2026. The law changes; check the current position before relying on this page.

Before you start

• Identify the entity type and statute. Most states have adopted a version of the Revised Uniform Partnership Act for general partnerships and LLPs, and a limited partnership act for LPs. Delaware has its own statutes. The defaults differ.
• Know who you represent. The partnership, a managing partner or an individual partner. Conflicts are common; address them in the engagement.

Clause checklist

• Capital contributions. Initial contributions, whether more can be required, and what happens if a partner does not contribute (dilution, loans, forfeiture).
• Capital accounts and allocations. Profit and loss allocation should follow the economics. Tax allocations need to satisfy the Section 704(b) rules; that drafting is for a tax adviser.
• Distributions. Timing, priority returns, tax distributions so partners can pay tax on allocated income, and limits on distributions that would leave the partnership insolvent.
• Management and voting. Who manages day to day, which decisions need unanimous or majority approval, and how deadlocks are broken. In an LP, check what limited partners may do without risking their limited liability.
• Fiduciary duties. Statutes impose duties of loyalty and care. Many let the agreement modify them within limits; Delaware allows broader modification for LPs, but not of the implied covenant of good faith and fair dealing.
• Outside activities. Can partners compete or pursue other opportunities? Spell it out.
• Transfers. Restrictions on transferring interests, rights of first refusal, and admission of new partners.
• Dissociation and withdrawal. Under RUPA, a partner's dissociation does not automatically dissolve the partnership. Define events of withdrawal, expulsion and the buyout price.
• Buy-sell provisions. Triggers (death, disability, divorce, retirement), valuation method, payment terms and any insurance funding.
• Dissolution and winding up. Events that trigger dissolution, who winds up, and the order of distributions.
• Liability. General partners are jointly and severally liable for partnership obligations; LLP and LP status changes that. Confirm any required state filings are made and kept current.
• Partnership representative. Under the federal centralised partnership audit regime, partnerships must designate a partnership representative unless they validly elect out. The agreement should name the representative and limit their authority.
• Dispute resolution. Mediation, arbitration or court, and the forum.

Common mistakes

• Using a form that does not match the entity type or the state statute.
• Leaving the valuation method for a buyout blank or vague.
• Defining "Partner" and "Member" interchangeably. The defined-term check catches this.

A partnership agreement review workflow in Word

LexDraft is a Word add-in from Microsoft AppSource. It opens as a side panel in Word 365 (Windows and Mac), Word 2021 and Word on the web, so the agreement never leaves the tool you already draft in.

1. Open the agreement in Word and open LexDraft in the side panel.
2. Pick the governing law. Select the state named in the governing law clause so LexDraft looks for state-specific red flags.
3. Run the review. LexDraft has four built-in playbooks (NDA, SaaS MSA, DPA and services agreement) and no dedicated partnership agreement playbook, so this runs as a general review against the governing law you chose. Use the checklist on this page to direct your own read.
4. Triage by severity. Findings are graded Critical, High, Medium or Low, and LexDraft flags standard terms that are missing.
5. Run the quick checks. The defined-term and cross-reference checks are rule-based and run without AI.
6. Accept or reject each redline. Accepted changes land as native Word tracked changes.
7. Verify and sign off. You check every output before it goes to the client or the other side.

What LexDraft does not do

LexDraft does not give legal or tax advice, draft tax allocations or make state filings. Nothing changes in your document until you accept a redline.

This guide is general information, not legal advice. LexDraft does not give legal advice; qualified counsel must review every draft. Spotted something out of date? Email support@lexdraft.ai and we will fix it.