Partnership Agreement - General (South Dakota)

SOUTH DAKOTA GENERAL PARTNERSHIP AGREEMENT

Scope gate. This agreement is for an ordinary South Dakota general partnership. General partners ordinarily face joint and several liability under SDCL § 48-7A-306(a). Do not use it as a limited partnership, limited liability company, corporation, joint venture, professional-entity filing, securities offering, tax shelter, estate-planning vehicle, or limited liability partnership without completing the separate LLP qualification route in Section 14.

1. EFFECTIVE DATE AND PARTNERS

Effective date: [__/__/____]

Total percentage interests must equal 100%.

2. FORMATION AND CLASSIFICATION

Partnership name: [________________________________]

Chief executive office: [COMPLETE ADDRESS]

South Dakota office, if any: [COMPLETE ADDRESS / NONE]

Business purpose: [DESCRIBE THE ACTUAL BUSINESS]

Under SDCL § 48-7A-202, an association of two or more persons carrying on as co-owners a business for profit forms a partnership whether or not they intend that result. The Partners confirm that they intend to operate the business described above as a South Dakota general partnership.

Duration—select one:

• ☐ Partnership at will; no definite term or particular undertaking.
• ☐ Definite term ending [__/__/____].
• ☐ Particular undertaking completed when: [OBJECTIVE COMPLETION TEST].

The Partnership is an entity distinct from the Partners under § 48-7A-201. Property acquired by the Partnership belongs to the Partnership and not to the Partners individually under §§ 48-7A-203 and 48-7A-501.

3. AGREEMENT CONTROL AND NONWAIVABLE GATES

This Agreement governs relations among the Partners and between the Partners and the Partnership to the extent permitted by SDCL § 48-7A-103. The Act controls matters this Agreement does not address.

Nothing in this Agreement may be read to:

• eliminate the duty of loyalty;
• unreasonably reduce the duty of care;
• eliminate the obligation of good faith and fair dealing;
• unreasonably restrict access to books and records;
• eliminate a Partner's statutory power to dissociate, although notice may be required in writing;
• eliminate the specified judicial-expulsion or mandatory-winding-up routes; or
• restrict rights of third parties under SDCL chapter 48-7A.

Any clause that would reach one of those subjects must be conformed by South Dakota counsel to § 48-7A-103.

4. CONTRIBUTIONS, ACCOUNTS, PROFITS, AND DISTRIBUTIONS

4.1 Initial contributions

Each Partner shall contribute the property, money, or services stated in Schedule A by [__/__/____]. A service contribution must state the work, completion standard, timing, and agreed accounting value.

4.2 Additional contributions

No Partner is required to make an additional contribution unless that Partner signs a written amendment stating the amount, due date, and effect on ownership, profits, losses, and voting.

4.3 Profit and loss allocation

The default rule in § 48-7A-401(b) is an equal share of profits and loss shares proportionate to profit shares. The Partners expressly replace that default as follows, subject to tax counsel's approval:

• Profits: [IN PROPORTION TO PERCENTAGE INTERESTS / OTHER FORMULA].
• Losses: [IN PROPORTION TO PERCENTAGE INTERESTS / OTHER FORMULA].

4.4 Distributions

Distributions require approval under Section 5 and shall be made [PRO RATA / OTHER COUNSEL-APPROVED FORMULA] after maintaining the following contractual reserves: [RESERVE POLICY]. This reserve rule is contractual; it is not attributed to § 48-7A-401.

4.5 Partner advances

A Partner payment beyond the agreed capital contribution is treated as an advance under § 48-7A-401(d)-(e) unless the Partners sign a different lawful characterization before payment.

5. MANAGEMENT AND VOTING

5.1 Default map and chosen voting system

SDCL § 48-7A-401(f), (i), and (j) supplies equal management rights, unanimous admission of a new Partner, majority-of-partners decisions in the ordinary course, and unanimous consent for an act outside the ordinary course or an amendment when an agreement does not provide otherwise.

The Partners select this contractual voting system:

• Ordinary-course matters: [MAJORITY OF PARTNERS / MORE THAN ____% OF PERCENTAGE INTERESTS].
• Outside-ordinary-course matters: [UNANIMOUS / AT LEAST ____%].
• Amendments to this Agreement: [UNANIMOUS / AT LEAST ____%], subject to any higher vote required by this Agreement or law.
• Admission of a new Partner: unanimous written consent.

5.2 Reserved decisions

The following require [UNANIMOUS / ____%] written approval:

• borrowing more than $[________] or granting a lien;
• acquiring or disposing of assets worth more than $[________];
• transferring Partnership real property;
• changing the nature of the business;
• admitting a Partner or changing percentage interests;
• settling a claim above $[________];
• entering a related-party transaction;
• electing LLP status, merging, converting, dissolving, or waiving winding up; and
• [OTHER RESERVED MATTER].

5.3 Meetings and written action

Regular meeting schedule: [________________________________]

Notice period and delivery method: [________________________________]

Written or electronic action is effective when the approval required by this Agreement is documented and retained with Partnership records.

6. PARTNER AUTHORITY AND THIRD-PARTY EFFECT

Under SDCL § 48-7A-301, each Partner is an agent for Partnership business. An ordinary-course act can bind the Partnership unless the Partner lacked authority and the other party knew or had notification of that lack. A non-ordinary-course act binds the Partnership only if authorized by the other Partners.

Internal authority matrix:

An internal restriction does not automatically protect the Partnership against a third party. Counsel shall determine whether to file a statement of partnership authority under § 48-7A-303. A real-property authority grant becomes conclusive only through the certified-copy recording route and conditions in § 48-7A-303(d)(2). A filed statement is canceled by operation of law five years after its filing or most recent amendment under § 48-7A-303(g), unless canceled earlier.

7. PARTNER CONDUCT, CONFLICTS, AND INFORMATION

7.1 Loyalty, care, and good faith

Each Partner shall comply with the duties and obligation in SDCL § 48-7A-404:

• account for benefits derived from Partnership business, property, or opportunities;
• avoid adverse dealing in the conduct or winding up of the business unless properly authorized;
• refrain from competing with the Partnership before dissolution;
• refrain from grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law; and
• exercise rights and discharge duties consistently with good faith and fair dealing.

7.2 Conflict approval

A Partner shall disclose all material facts concerning a proposed conflict. The transaction may proceed only after [ALL OTHER PARTNERS / THE FOLLOWING AGREEMENT-SPECIFIED VOTE] authorize or ratify the specific transaction in writing. Counsel must confirm that any category treated as nonviolative and any approval standard complies with § 48-7A-103(b)(3).

7.3 Books and information

The Partnership shall keep its books and records at its chief executive office. Partners and their agents and attorneys shall receive access consistent with § 48-7A-403. Former Partners receive access to records for the period in which they were Partners. No confidentiality rule may unreasonably restrict those statutory rights.

Required internal records include this Agreement and amendments, Partner and contribution ledgers, material contracts, authority approvals, financial statements, tax filings, bank records, minutes or written consents, insurance records, and filed statements.

8. LIABILITY, REIMBURSEMENT, AND INSURANCE

8.1 General-partner liability warning

Unless the claimant agrees otherwise or law provides otherwise, all Partners are jointly and severally liable for Partnership obligations under § 48-7A-306(a). A person admitted into an existing Partnership is not personally liable for obligations incurred before admission under § 48-7A-306(b).

The judgment and execution rules in § 48-7A-307 apply. A judgment against the Partnership is not by itself a judgment against a Partner, and execution against a Partner for a Partnership claim requires a judgment against the Partner plus a statutory exhaustion, bankruptcy, consent, court-permission, or independent-liability route.

8.2 Reimbursement and indemnification

The Partnership shall reimburse and indemnify a Partner as required by § 48-7A-401(c)-(e). Any additional contractual indemnity is stated in Schedule B. An internal indemnity, exculpation, or damages allocation does not restrict a third party's statutory rights or eliminate duties that § 48-7A-103 makes nonwaivable.

8.3 Insurance

The Partnership shall maintain the insurance selected after broker and counsel review:

• ☐ Commercial general liability.
• ☐ Professional / errors and omissions.
• ☐ Workers' compensation, if required for the actual workforce.
• ☐ Commercial auto.
• ☐ Cyber / privacy.
• ☐ Key person or buy-sell funding.
• ☐ Other: [________________________________].

9. TRANSFERS AND NEW PARTNERS

Under §§ 48-7A-501 and 48-7A-502, a Partner is not a co-owner of Partnership property. The only transferable Partnership interest is the Partner's share of profits and losses and right to distributions, which is personal property.

Under this Agreement, no transfer admits the transferee as a Partner or conveys management, voting, authority, or information rights unless all Partners sign an admission and joinder. Complete the following transaction terms in Schedule C:

• permitted and prohibited transfers;
• notice and consent;
• right of first refusal or buy-sell process;
• valuation and payment terms;
• death, disability, divorce, bankruptcy, charging-order, and entity-change triggers; and
• transferee joinder and tax documentation.

10. WITHDRAWAL AND DISSOCIATION

A Partner has the power to dissociate at any time by express will under § 48-7A-602(a). This Agreement requires written notice delivered under Section 15, but does not eliminate that statutory power.

Notice period: [____] days, subject to the statutory effect of the Partnership's at-will or term classification.

A dissociation is wrongful when it breaches an express provision of this Agreement or meets the term/undertaking conditions in § 48-7A-602(b). A wrongfully dissociating Partner is liable for resulting damages under § 48-7A-602(c).

The events in § 48-7A-601—including agreed events, specified expulsions, bankruptcy-related events, death, incapacity, and entity, trust, or estate events—must be reviewed for each Partner's actual status. Add any contractual dissociation event here:

[________________________________]

After dissociation, management rights and duties change under § 48-7A-603. If the dissociation does not cause dissolution and winding up, Article 7 of the Act governs the statutory buyout and post-dissociation rules.

11. BUYOUT AFTER DISSOCIATION WITHOUT DISSOLUTION

Unless South Dakota counsel approves a lawful replacement in Schedule D, the Partnership shall follow § 48-7A-701. That section sets the default valuation based on the greater of liquidation value or whole-business going-concern value without the dissociated Partner, requires interest, permits stated offsets, and supplies payment, information, deferred-payment, action, and fee rules.

The statutory timeline includes payment or tender if no purchase agreement is reached within 120 days after written demand and a 120-day challenge period after the statutory notice. Do not replace those periods with an unspecified or inconsistent deadline.

For two years after a nondissolving dissociation, § 48-7A-702 can bind the Partnership through a qualifying act of the dissociated Partner. Section 48-7A-703 separately addresses the dissociated Partner's liability to other persons. Either the Partnership or dissociated Partner may file a statement of dissociation under § 48-7A-704; statutory notice arises 90 days after filing for the cited purposes.

12. DISSOLUTION AND WINDING UP

12.1 Classification-sensitive dissolution

Apply the route selected in Section 2:

• Partnership at will: absent a counsel-approved lawful variation, notice of a qualifying Partner's express will to withdraw causes dissolution under § 48-7A-801(1). This Agreement does not invent a 90-day majority-interest continuation vote.
• Definite term or particular undertaking: apply § 48-7A-801(2), including the specific 90-day, one-half-of-remaining-Partners route after the listed dissociations, unanimous will to wind up, and expiration or completion route.
• All Partnerships: apply agreed dissolution events, illegality subject to the statutory cure, and the partner- or transferee-requested judicial routes in § 48-7A-801(3)-(6).

12.2 Waiver of winding up

After dissolution but before winding up is complete, the Partners may waive winding up only through the participation and protections required by § 48-7A-802(b). Document the approval and preserve accrued third-party rights.

12.3 Winding up

A Partner who has not wrongfully dissociated may participate in winding up, subject to judicial supervision for good cause under § 48-7A-803. The person winding up shall inventory and preserve assets, address claims, complete contracts, collect receivables, dispose of property, discharge liabilities, make required filings, and settle accounts.

Assets must first discharge creditor obligations, including permitted Partner-creditor claims. The remaining accounts, distributions, and contribution duties are governed by § 48-7A-807 and this Agreement to the extent lawful.

12.4 Statement of dissolution

A nonwrongfully dissociated Partner may file a statement of dissolution under § 48-7A-805. It cancels a filed statement of partnership authority for the stated purposes, and statutory notice of dissolution and authority limits arises 90 days after filing for the cited purposes.

13. DISPUTE PROCESS

Before execution, select and complete one final forum route. Delete the unselected route.

• ☐ Court route: Any action shall be brought in [COURT AND COUNTY WITH SUBJECT-MATTER AND PERSONAL JURISDICTION].
• ☐ Arbitration route: A dispute shall be resolved under [RULE SET] by [NUMBER] arbitrator(s), seated in [COUNTY, STATE], with allocation of fees stated as [________________________________].

Pre-filing negotiation / mediation: [REQUIRED OR NOT REQUIRED; DEADLINE; MEDIATOR-SELECTION METHOD]

Nothing in this section prevents a party from seeking emergency relief from a court with jurisdiction or overrides a nonwaivable statutory remedy. South Dakota counsel must review any jury waiver, fee shifting, limitation period, remedy limitation, restrictive covenant, or confidentiality term before inclusion.

14. OPTIONAL LIMITED LIABILITY PARTNERSHIP ROUTE

This Partnership is not an LLP merely because this Agreement mentions one.

• ☐ The Partners do not elect LLP status.
• ☐ The Partners approved LLP status by the vote required under § 48-7A-1001(b), completed the current statement of qualification, and filed it with the Secretary of State on [__/__/____], effective [__/__/____].

While LLP status is effective, an obligation incurred by the LLP is solely the Partnership's obligation under § 48-7A-306(c); the shield is not limited to another Partner's negligence. Status remains subject to cancellation or revocation. An LLP must file the annual report required by § 48-7A-1003 and current cross-referenced law. Confirm current forms, registered-agent or office information, deadlines, and fees directly with the Secretary of State before filing.

15. GENERAL TERMS

15.1 Notices

Required notices must be in writing and delivered by [PERSONAL DELIVERY / TRACKED MAIL / AGREED ELECTRONIC METHOD] to the address in the Partner ledger. Notice is effective [OBJECTIVE RECEIPT RULE].

15.2 Amendments and records

An amendment is effective only when approved under Section 5 and signed or otherwise authenticated in a retained record. Update every affected schedule, Partner ledger, authority record, and public filing.

15.3 Entire agreement; severability; counterparts

This Agreement and its completed schedules state the Partners' agreement on its subject. If a provision is unenforceable, it shall be narrowed or severed only to the extent counsel determines lawful, without expanding another provision. Counterpart and electronic execution may be used only through a method approved for this transaction and retained as an authoritative record.

15.4 Governing law

South Dakota law governs, subject to any mandatory law that applies because of the Partnership's activities, property, licensing, workforce, or operations in another jurisdiction.

16. SIGNATURES

Each Partner acknowledges the general-partner liability warning, opportunity for independent counsel and tax advice, and obligation to complete all schedules before signing.

Partner 1

Signature: ________________________________________

Printed name: [________________________________]

Entity and title, if applicable: [________________________________]

Date: [__/__/____]

Partner 2

Signature: ________________________________________

Printed name: [________________________________]

Entity and title, if applicable: [________________________________]

Date: [__/__/____]

Partner 3

Signature: ________________________________________

Printed name: [________________________________]

Entity and title, if applicable: [________________________________]

Date: [__/__/____]

SCHEDULE A — CONTRIBUTIONS AND ECONOMIC TERMS

SCHEDULE B — ADDITIONAL INTERNAL INDEMNITY

[INSERT COUNSEL-APPROVED TERMS OR STATE “NONE.”]

SCHEDULE C — TRANSFER AND BUY-SELL TERMS

[INSERT COMPLETE NOTICE, CONSENT, VALUATION, FUNDING, PAYMENT, AND JOINDER TERMS.]

SCHEDULE D — DISSOCIATION BUYOUT VARIATIONS

[INSERT COUNSEL-APPROVED VARIATIONS FROM SDCL § 48-7A-701 OR STATE “STATUTORY DEFAULT APPLIES.”]

SOURCES AND REFERENCES

• South Dakota Legislature — SDCL § 48-7A-103
• South Dakota Legislature — SDCL § 48-7A-201, § 48-7A-202, and § 48-7A-203
• South Dakota Legislature — SDCL § 48-7A-303
• South Dakota Legislature — SDCL § 48-7A-306 and § 48-7A-307
• South Dakota Legislature — SDCL § 48-7A-401, § 48-7A-403, and § 48-7A-404
• South Dakota Legislature — SDCL § 48-7A-501 and § 48-7A-502
• South Dakota Legislature — SDCL § 48-7A-601, § 48-7A-602, and § 48-7A-603
• South Dakota Legislature — SDCL § 48-7A-701, § 48-7A-702, § 48-7A-703, and § 48-7A-704
• South Dakota Legislature — SDCL § 48-7A-801, § 48-7A-802, § 48-7A-803, § 48-7A-805, and § 48-7A-807
• South Dakota Legislature — SDCL § 48-7A-1001 and § 48-7A-1003

South Dakota business counsel and the Partnership's tax professional must approve this Agreement before execution.