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Learn more about Partnership Agreement in Singapore

It is then strongly recommended to draft a partnership agreement whose clauses allow you to protect your activity. Indeed, partnership agreements can present risks of all kinds, disclosure of confidential data, business strategies or others. The partnership agreement is defined as the agreement that binds professionals in order to expose to the customers of each party the services of the parties in exchange for a commission, or to put in common certain production equipment, or to share information, methods, or inventions. This type of contract has many advantages in terms of business growth.

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Table of contents

  1. What is a partnership agreement?
  2. How to write a partnership agreement?

What is a partnership agreement?

Legally, a partnership agreement is called an innominate contract, which means that it is not governed by any legal text, i.e. there is no legal provision prescribing which mention must appear in the agreement. Nevertheless, during the execution, the obligations of the parties are subject to Singaporean law. The parties therefore remain relatively free in the drafting of their agreement, the only limit being the respect of public policy. Obviously, the agreement cannot cover illegal elements. The concrete provisions of a partnership agreement are based on the following elements:

➤ The duration of the partnership
➤ What the promotion is about, what type of information will be promoted?
➤ A reminder of the general behavior that the parties must adopt during the execution of the agreement (mutual respect, good faith etc.)
➤ The amount of the commission
➤ The extent of confidentiality
➤ The prevention of any dispute (arbitration clause, choice of court clause)

How to write a partnership agreement?

If you do not wish to call upon a professional, a lawyer,  to accompany you in the drafting of your partnership agreement, as mentioned before, these agreements are in the grip of an important liberalism, which means that you can at your own risk free yourself from the advice of a professional. Whatever your sector of activity or the form of your company, you can therefore be satisfied with a professional model of partnership agreement such as the one proposed for download by Themis Partner.

In order to guarantee a quality and security in the execution of the agreement, here are the different essential clauses and the documents attached to a good agreement even if no law provides for formalism:

An annexed document must imperatively specify in as much detail as possible the identity of the parties, an affidavit of the company must also be annexed as well as the identity card of the director(s) signing the agreement,

The subject matter, which is a mandatory element within the contract to identify the scope of the agreement and its application in this case,

The price, which is one of the essential elements of any business contracts, for more precision and therefore security, the mention in figures and letters is strongly advised. The clause can also stipulate the terms of payment, for example that it must be made no later than seven days after the customer has paid the other party,

A confidentiality clause is necessary to protect your business since a lot of information will be exchanged. A very particular attention must thus be attached to this clause. You must take care to define its content and its duration: it is advisable to draw up a list, preferably non-exhaustive, which presents what the clause concerns. This could be software and data, business strategy, inventions, financial information or information about suppliers. As for the temporality, you can limit the confidentiality in time by mentioning a defined period,

A clause relating to the duration of the established commercial relationship, two possible cases: either you envisage that the relationship will end at the end of a certain time, expressly defined, it is then a question of a contract for a fixed period; or that the relationship is said to be for an indefinite period. In the first case, it is possible to provide for tacit renewal, for example. In the second case, as it is always possible to terminate a contractual relationship, it is advisable to envisage the terms of a termination: prior notice of default for example,

An independent termination clause, this type of clause can be interesting when you contract for the first time with a professional and therefore you have no knowledge of his way of working. In the event that you are not satisfied with the agreement reached, this clause allows you to terminate the contractual relationship without having to take the matter to court,

A clause relating to the competent jurisdiction and one relating to the law applicable to the contract, or even an arbitration clause, in the interest of speeding up the resolution of a possible dispute, these clauses make it possible to determine in advance which jurisdiction will be seized and which law will govern the dispute:

➤ The first is called the "choice of court clause". A 2005 Hague International Convention on Choice of Court Agreements governs the regime for this clause. As for the parties to the International Convention, the European Union (except Denmark), Mexico and Singapore have ratified it. The latter is used in view of concerns related to the costs and the execution of a dispute. Often the professional will designate in this clause the jurisdiction of the place of his registered office. However, this clause is very often the result of a long negotiation because in view of the stakes involved the parties attach particular importance to it.
➤ The second is the law designated by the parties to resolve their dispute. The parties are generally free in their choice of law, but the judge may overrule them if the choice of law is contrary to public policy or public order.
➤ Finally, the arbitration clause, the clause that designates the method of dispute resolution that is arbitration. The arbitral board makes an arbitral award, so it is not a state court that decides the dispute. This clause has advantages and disadvantages. The advantages: the rapidity of the procedure contrary to the time limit provided for the state courts. But also, the confidentiality since the arbitral award is not subject to publicity because it is not rendered in the name of the State thus this one is not the subject of publication consultable by all. One of the disadvantages lies in the cost of this privatized justice. Indeed, the arbitrators being experienced experts, their remuneration is often high. This clause must also be drafted with the greatest care since it has a particular regime. Positive law recognizes its autonomy in relation to the contract, which means that if the contract is annulled or becomes null and void, the arbitration clause is no less affected, as long as it is also valid. And these validity criteria are relatively flexible; it is sufficient, for example, for the clause simply to include the word "arbitration" and it will be considered as such. Here again, it is advisable to consult a lawyer in order to obtain a good quality clause.

As you can see, the clauses cover the whole process, from the conclusion of the partnership agreement, through its execution, then its duration and, are even envisaged the modalities of resolution of a possible dispute.

Moreover, if you are led to contract with a professional who proposes standard contracts, it is necessary to include the date and the signature of the legal representative of the company on the contract. This will attest to the fact that he/she has read all the clauses in the contract and has made any comments he/she may have.

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