In business as in marriage it is a good idea to really check out prospective partners before tying the knot - and also to have a solid and well-documented understanding of what is (and isn't) included in the partnership business.
Recently a client came to us for advice on a real estate partnership that owned an apartment complex. When a building down the street from the partnership property came up for sale, a dispute arose with the other partner because she claimed that the building down the street was a partnership opportunity (and therefore should be offered to her at a great price). Unfortunately, the partnership agreement didn't say whether the partnership business was limited to a single building or whether it applied to other investment properties.
Luckily for all concerned, the dispute was eventually settled by having our client buy out the other partner - it wasn't cheap, though because the partnership agreement did not contain pricing provisions for buyouts or provide any financing for the purchasing partner.
Morals of this story:
(1) Check out your partner before you sign anything. If this person is not one whom you can count
on to rewrite the agreement if it turns out to be unfair in operation, he/she is not the partner for
you.
(2) Make sure the partnership agreement spells out what is and isn't included in the partnership
business. If it doesn't, this can be expensive later on. The same comment applies to businesses
organized as corporations or LLCs, which should have a shareholders' agreement or an
operating agreement addressing these issues.
(3) Always be sure that the partnership agreement (or shareholders' agreement or operating
agreement) spells out what happens if the partnership dissolves for any reason -- one party wants
to sell, dies, files for bankruptcy or whatever. If one party has rights to buy out the other,
consider allowing the buying party to make payments over time or, in the case of death, covering
the payments with life insurance. You will sleep better!