When two individuals or entities come together to form a partnership, they generally have a clear understanding of their roles and responsibilities. However, there may be instances where one partner may want to take a more passive role in the partnership. In such cases, a silent partnership agreement is an effective way to establish a working relationship between both parties.

A silent partnership agreement is a legal document that outlines the terms and conditions of a partnership where one partner is designated as a silent partner. The silent partner generally provides financial support and has limited liability while the other partner manages the day-to-day operations of the business.

Here`s a sample of a silent partnership agreement to give you an idea of what such an agreement might look like:

PARTNERSHIP AGREEMENT

THIS AGREEMENT made on the __ day of ____, 20__

BETWEEN:

[Name of active partner], with an address at [address], (hereafter referred to as the “Active Partner”)

AND

[Name of silent partner], with an address at [address], (hereafter referred to as the “Silent Partner”)

WHEREAS the Active Partner desires to carry on a [type of business] enterprise

AND WHEREAS the Silent Partner desires to provide financial support to the Active Partner in connection with the enterprise

NOW, THEREFORE, in consideration of the mutual promises and other good and valuable consideration exchanged by and between the parties, it is agreed as follows:

1. Partnership

The parties hereby agree to form a partnership (the “Partnership”) to engage in the business of [type of business] in accordance with the terms of this Agreement.

2. Contributions

The Silent Partner shall contribute $[amount] to the Partnership.

The Active Partner shall contribute [description of contribution] to the Partnership.

3. Profits and Losses

The Partnership shall allocate profits and losses in accordance with the percentage of ownership. The Silent Partner shall be entitled to [percentage] of the profits and shall bear [percentage] of the losses. The Active Partner shall be entitled to [percentage] of the profits and shall bear [percentage] of the losses.

4. Management

The Active Partner shall have the sole authority to manage the day-to-day operations of the business. The Silent Partner shall not participate in the management of the business.

5. Liability

The Silent Partner shall have limited liability for the debts and obligations of the Partnership.

6. Term

The Partnership shall commence on the date of this Agreement and shall continue until terminated in accordance with this Agreement.

7. Termination

The Partnership may be terminated by mutual agreement of the parties.

8. Governing Law

This Agreement shall be governed by and construed in accordance with the laws of the state of [state].

9. Entire Agreement

This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, whether written or oral, relating to the subject matter of this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

[Signature of active partner]

[Signature of silent partner]

In conclusion, a silent partnership agreement is an effective way to clearly establish the roles and responsibilities of both parties in a partnership. It is important to consult with a lawyer experienced in partnership agreements to ensure that all legal requirements are met.