Future Business Leaders of America (FBLA) Agribusiness Practice Test

Which item must a written partnership agreement address?

1. The name of the business only

2. How partners make personal investments

3. Control each partner has in the business

4. Only profit distribution

The correct answer is: Control each partner has in the business

A written partnership agreement is crucial in outlining the structure and operation of a partnership, and control each partner has in the business is a fundamental aspect that must be addressed. This element defines how decisions are made, who has authority over daily operations, and the powers assigned to each partner regarding business activities. It is essential for preventing conflicts and ensuring that all partners have a clear understanding of their roles and responsibilities within the partnership. The agreement should detail decision-making processes, voting rights, and the extent of each partner's authority. By clearly establishing control dynamics, the partnership can operate smoothly and make cohesive decisions that align with the partners' collective goals. This clarity is vital for avoiding misunderstandings that could lead to disputes in the future. In contrast, while making personal investments, business names, or profit distribution are important topics that can be covered in a partnership agreement, they are not as critical to the operation and governance of the partnership as the control aspect. The nuances of partner authority significantly influence the partnership's functioning and success, making this a key element that requires careful consideration in the agreement.