Legal Term

partnership agreement without buy-sell clause business death disability

Legal Definition

A partnership agreement that lacks a buy-sell clause is a contract between business owners that does not establish a pre-negotiated process for one owner's interest to be purchased if they die or become permanently disabled. This omission leaves the disabled or deceased owner's estate, and the remaining owners, in a legally ambiguous and often financially disastrous situation with no agreed-upon valuation method, funding source, or transfer procedure.

In Plain English

It's like being business-married with no prenup for death or disability. If something happens, your family or the other owners can get stuck in a messy, expensive fight over your share.

Example in a Contract
**Section 4: Profit Sharing and Partner Status** Contractor shall receive 15% of Net Profits quarterly, as defined in Exhibit A. For purposes of profit distribution only, Contractor shall be considered a 'Partner' of the Company. This agreement does not create a general partnership, and Contractor shall have no ownership interest in Company assets. All other rights and obligations remain solely those of an independent contractor. *[Note: There is no section addressing what happens to Contractor's profit share if Contractor dies or becomes unable to perform services.]*

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