Legal Question in Business Law in California

Re: partnership vs. shareholder agreements

You're not even comparing apples and oranges. Partnerships create unlimited liability in all partners for the conduct of all other partners; I never allow clients to enter general partnerships, only Limited Partnerships for specific purpose such as real estate investment.

Shareholders are the owners of a corporation, which needs to be properly formed and managed to avoid liability and tax problems. If that is what you need to form, feel free to contact me for the help you'll need.

Re: partnership vs. shareholder agreements

Partnership agreements are between partners in a partnership.

Shareholder agreements are between shareholders of a corporation.

The distinction gets down to the difference between a partnership and a corporation, which is substantial. Both are forms of business organization, bu that's about where the similarity ends.

The two types of agreement might have overlapping terms and cover somewhat similar issues and concerns, but the fundamental concepts and governing law is SO completely different between the two that a document which is useful as a partnership agreement has quite limited use or value as an agreement between the shareholders of a corporation, and vice-versa, even if every occurrence of the word "partner" were replaced with "shareholder," etc.

We LawGuru attorneys frequently receive questions from people who are in the process of forming, or have recently formed, a closely-held corporation who refer to themselves as partners. This use of the term "partner" is probably incorrect in 95% of such cases. The co-founders of a closely-held corporation aren't usually partners, although they might be, based on their prior business relationship. Generally, they are more accurately referred to as the corporation's promoters, founders, shareholders, investors or some such term that shows the business vehicle they've chosen is a corporation and not a partnership. The distinction could be important, because someone who holds himself out to the public as a partner may be treated as one if sued on the debts of the business entity, even if the entity is in fact incorporated. (I assume you know that partners are liable for the debts of a partnership, but shareholders are rarely liable for the debts of a properly-run corporation.)

Re: partnership vs. shareholder agreements

They are both contracts. One details the agreement between partners in an enterprise. The other details the agreement between shareholders in a corporation or LLC. They serve basically the same purposes.