A Legal Exposition of Business Partnership - David Etido (Esq)

African Business and Economy: A legal exposition on Business Partnership - David Etido (Esq.)
The road to economic prosperity and attaining the status of a world economic giant has never made an effortless walk. The leading lights we reckon with today have struggled over difficult times and circumstances to sit as successful economies, with only a few states crossing over the red line of mass poverty, widespread unemployment and underdevelopment. Today great economies form themselves into powerful  economic blocs such as the G7 and G8, and most readily grant aids to developing economies. Back home in Africa, African Economies have rather struggled to sustain itself and its people, a struggle that has perpetually repressed their emergence on a global pedestal. The result has been a perennial tag of majority of African economies as developing economies.
Nigeria, Egypt and South Africa's economies are considered as the biggest economies in Africa by their Nominal GDPs (IMF World Economic Outlook 2016), Nigeria by 2014 had grown her Nominal GDP to become the 20th in the world, turning over approximately 569 Billion Dollars. A peek into Its GDP Per capita which is calculated with an overwhelming population of over 180 million citizens, reveals a terrible, frail and actual picture of the Nigerian Economy especially as it affects the quality of live of the entire population. The Country’s Vice President had in 2015 declared that from available statistics, more than 110 million Nigerians live below the poverty line.
In more developed climes, the youth population drive the businesses that drive the economy,  youthful innovation, creativity, zeal and overall capability to deviate from the usual,  disrupting systems and replacing structures always provide the necessary economic rev that drives economic revival.  As African professionals we have studied the African business environment and have observed that there are several factors militating against the growth of African businesses, most especially business ventures driven by members of the young People's population. Factors which includes being stuck in a system that is embroiled with lacks of capital or supportive infrastructure that aids business development, deliberate sabotage of young and innovative ventures by the existing beneficiaries of the status quo, corruption and unnecessary redtapism, and general penchant for mediocrity and favouritism in execution of government programmes and policies. Young persons armed with a full arsenal of untapped energy, passion and ideas are cowed to work under ungrateful and tortuous bourgeoisies, who plague them with under payment, work slavery and suppression of professional development.  What is more deplorable is that these ones are left to engage themselves in unwholesome inter organisational strive and rivalry for promotions and recognitions that come with an icing on no cake.
The state has inexcusably failed the millennials. In a widely disseminated speech of  Mark Zuckerberg to the Harvard Class of 2017, the king of tech, attributed his success to among other things, a working system, a supportive family and an environment where ideas are allowed to thrive and not suffocated out of existence. For a society that does not offer any tangible growth incentives to its people, the best that such society can do is not to destroy what they are trying to gather together with their limited capabilities.
Indeed, Africans desire a change in the status quo, there is a burning desire to see African business become word players, a desire to see our under 30 CEO’s make the list of World most successful entrepreneurs, and our businesses listed among fortune 500 companies. The turning point in African businesses may not be from the company that attracted the Billion dollar investment , and premiering with a well furnished office complex and a retinue of staff, but from the ideas and innovations of little start ups, innovative and technology driven solution providers and heavy investors in the uncharted courses in Africa. The destination must be taking our businesses and products to the world from the shores of Africa.
Having a firm grasp of our economic history, we seek to re-present to African youths, the concept of business partnership. A concept we believe is a tailor cut solution to the problems of starting and running businesses in Africa and a catalyst if properly harnessed that will drive increase in economic activities in Africa. Partnership is a unique opportunity to leverage on the strength, passion, contacts, innovations and skills of another or group of persons to drive a business vision or dream, by bringing them together under a well organised structure as contributors to the realization of the business goal and having shared rights and obligations.

The general psychology of African start-ups and business proponents is that they should have and own 100% of their business interests, they seek other young contributors to come build their businesses with them for a fee or with either no assurance of having a stake in the business venture or with offers quite laughable and degrading. Great minds and needed human resources that can reproduce other resources are shut out of contributing to the needed growth of a business because of trust and ownership concerns. The deep desire to keep 100% ownership/profits of investments see our under 30 CEO’s,  as sole CEO and employee without any committed compatriot. This obviously affects the general productivity of the business. The common mistake is that most innovators of business ideas rather prefer having young vibrant, creative and resourceful persons as employees that would be placed on a meagre paid employment rather than taking advantage of the numerous benefit of partnership. This behavioural pattern can be traced to our traditional belief  in family ownership and control of businesses, which most times subject profit making ventures to the native rules of succession.
Andrew De Pietro posited that “Just because you have a bold new business idea doesn't mean you're destined for success. In fact, a USA Today article reveals that 50 percent of new companies fail to make it to the five-year mark. And just a third are around to celebrate a decade in business. If you want your venture to go the distance, you need to put in the effort and find others who are willing to do the same.” No one will give his all to you being a start-up without being assured of what’s in the business for him, you should not only look at how the business will benefit you if you succeed, but what it will cost you if you fail simply because you wanted everything to yourself.

Partnership has been differently classified, the most common classifications are General and Limited Partnership. General Partnership is a partnership that involves two or more individuals coming together to pursue a business prospect, while having equal rights and responsibilities as it concerns the management and decision making for the business. Each partner has the same right as the other and can enter into binding contracts and relationships  with third pa2rties without the concurrence of all other partners. Each individual partner assumes jointly, full responsibility for all of the business's debts and obligations.
Limited Partnerships is a partnership where the rights and liabilities of each partner are not equal. While some of the partners may be general partners, others may be limited partners. This entails that while others may simply be investors who do not desire and may not be involved in the management of the business others will not only be investors, but also active managers and directional minds of the business.
The conventional method of establishing partnership by forming it into a business name is not the sole option exercisable for a partnership. Individuals can form partnerships that results into the direct formation of a company, by this way the terms of the partnership are developed into the company’s memorandum and articles of association, already established companies or businesses can also collaborate to execute a business partnership or a joint venture.
There exist several successful archetype of partnership, the duo of eBay and Apple Inc are reviewed here under.
Pierre Omidyar and Jeffrey Skoll: eBay
Pierre Omidyar net worth: $9 billion
Jeffrey Skoll net worth: $4.9 billion
Company net worth: eBay — $36.6 billion net worth
Pierre Omidyar might officially be the sole founder of eBay, but his partner Jeffrey Skoll was key to the online company’s success. Armed with a Stanford MBA, Skoll joined Omidyar in 1995, when the latter invited him to draw up a business plan for his company, Auction Web, which would go on to become eBay.
Complementary skills and shared values are often the ingredients for successful business partnerships. Omidyar was the computer programmer, while Skoll was the businessman. However, both brought a democratic approach to eBay, referring to their customers as “the community." And that outlook helped them achieve great success. On its first day as a public company in 1998, eBay traded 218 million shares.

Steve Jobs and Steve Wozniak: Apple Inc.
• Steve Jobs net worth: $14.1 billion in 2011
• Steve Wozniak net worth: $100 million
• Company: Apple Inc. — $495 billion net worth
Dynamic duos are common in the tech industry, and the partnership of Steve Jobs and Steve Wozniak was no exception. The men became friends at a summer job in 1970, and six years later they founded Apple together.
What made Jobs and Wozniak successful as business partners were their complementary personalities and skill sets. Wozniak was the hands-on engineer, constantly tinkering with computers. Jobs, on the other hand, was the businessman who intended to change the world — and did so thanks to his ability to sell Apple to corporations and the public alike.
In 1976, Wozniak developed the first Apple computer. Jobs convinced Wozniak to start their own company. The two sold some of their own possessions (including Wozniak's calculator and Jobs's van) to fund the business. And thus Apple Computer was born, one of the most successful computer companies in the world. (Source: Business Insider)
Practical use of partnership to solve entrepreneurial problems; partnerships could be harnessed to readily solve some business challenges facing entrepreneurs today, a few of such challenges and how partnership can be leveraged to solve them are:
Generation of Start-up or development capital: Partnership can be used to bolster and generate the necessary financial muscle to start a business or further develop an existing one. Many young persons with creative ideas most times do not have the financial ability to get these ventures running, but around them are their classmates, friends, mates, neighbours or other passionate entrepreneurs who might possess the ability to solely finance their ventures or contribute meaningfully to them. It is also true  that most people that possess some level of wealth at times do not have particular ideas of investment and will most times jump in on one that is well articulated and packaged  with a possibility of good returns.
Engaging a Unique Skilled Worker Or Service Provider :Today's Businesses are more prone to this nature of difficulty, examples are more common in our world of digital technology and internet based services. One of such is having youths with savvy electronic business ideas, and at the same time lacking the competent skill and knowledge to translate their thoughts into reality.  The services needed to actualize this if paid for or is to be employed will be overwhelmingly expensive and might weigh down on the visionary. Partnership is the best bet here, rather than employing or paying for such services like App creation, website design and hosting, programming and coding, the professional can be co-opted as a partner who specialises on the professional service as part of his contribution to the company/business and subsequently share in the profit making while the visionary can focus on other needs of the venture. Partnership will also allow for in-depth content and idea development.

Growing complimentary business services: Persons who provide services which also needs complimentary services carried out by other persons do not need years to grow big establishments in other to afford giving full services, one can always leverage on partnership to grow bigger and stronger, by partnering with other complimentary service providers to deliver a whole package and boost profit. Other examples abound.
In developing and consummating a partnership deal, several measures should be taken to make the partnership formal and regulated. One must not be carried away by filial relationship to the detriment of his personal or corporate interest. Most persons are afraid of partnerships, due to the believe that they can be outsmarted or out manoeuvred, intellectual property theft, competition concerns, and the list descends into the mundane in Africa to include diabolical and spiritual concerns. To secure and regulate a smooth negotiation, agreement and operation of a successful partnership, there are several fundamental things that can be done to protect both the innovator and other partners or prospective partners. Most fundamental of them all is:
Partnership Agreement: This is a legally binding document that puts succinctly all the terms, conditions, exceptions and covenants for the setting up, management and operation of a partnership. The Partnership Agreement should give unambiguous details, of partners contribution of capital and finances, management of finances and the business concerns, profit making and sharing, protections such as non disclosures and non compete clauses, indemnification and compensation for breach of any part of the agreement.
Other Agreements that can be entered into are:
Non disclosure/Non compete Agreement: this is a unique agreement that is most useful during negotiation and discussions among persons for a possible consideration of a partnership and also for the duration of the partnership. It is an enforceable covenant for the protection and confidentiality of intellectual property, trade secrets, confidential information as relates to know how, business strategy/plans, product development, and any other information the parties consider to be confidential. This promise is strengthened with a covenant to hold harmless and compensate the other parties in event of a breach. The other side of the agreement which is the Non Compete, is a covenant among the parties, not to engage in or contribute in any way to any  business venture having similar objects with the objects of the partnership. The bindingness of the Agreements is not dependent on whether or not a party remains a part of the partnership, non disclosure and non compete agreements most times bind the parties for a certain duration whether they remain in the partnership or in the agreement or not depending on the agreement.
Shareholder’s Agreement/Joint Venture Agreements: This is the option of agreement individuals or corporate bodies, seeking to go into a  partnership  by establishing a company will execute. This agreements will subsequently be incorporated into the memorandum and articles of association of the newly  formed company. The shareholders agreement can state, who the directors of the new company will be and how the will be appointed, who the shareholders will be and their shareholdings in the company, it will put down the terms and conditions that will metamorphose into the articles that will guide the conduct  of business by the company. Remedy for breach of this agreement can be secured with an indemnity clause, hereby eliminating the fear of being cheated out of a business concern of which one has plunged in human and financial resources.
Registration of Partnership Business.
To begin the operation of a partnership, it is necessary under the necessary laws to register the business venture as a business name or as a company. Each platform has its own advantages and disadvantages. Every partnership will have to choose option that suits them most and move ahead to legalise their business and take advantage of the benefits of having a legal corporate  personality.
The decision and choice of a partner should not be done indiscriminately, one must know the type of partner he needs and the quality expected of the partners. One must consider depending on the need of the visionary/visionaries,
• Whether or not the partner will have time to contribute to the enterprise and the quality of such time.
• Whether or not the partner is discipline, punctual and alive to responsibilities, so as not to belabour other partners to do the work meant to be done by an inactive partner.
• Whether or not the prospective partner is a hard worker, or will he or she routinely leave tasks for you or others to complete?
• Whether or not the partners share the same vision, goal and sense of urgency as you and every other person share.
• Whether or not he is competent at what he says he does or really possess the ability to make the contributions he promises to bring  the table.
What a partnership agreement should contain:
1. Name and address of the partners
2. Duration of Partnership/Termination
3. Object of the partnership
4. Partners' contributions—These may be in cash, property or services. Be sure to determine the value of all non-cash contributions.
5. Partners' compensation—Determine how profits will be split up and how often. Also decide if any of the partners will receive a salary.
6. Management Authority—Will partners be able to make some decisions on their own? Which decisions will require the unanimous consent of all partners? How will the company be run and the finances managed.
7. Kinds of outside business activities that will be allowed for partners
8. Partner withdrawal—Decide how the death, retirement, withdrawal, disability, or death of a partner will be handled through a buy-sell agreement. Also determine whether or not a partner who has simply withdrawn will be allowed to operate a competing business.
9. Disposition of the partnership's name if a partner leaves
10. How to handle disputes—Decide whether or not mediation or arbitration will be provided for in the case of disputes that cannot be resolved amongst the partners. This is a way to avoid costly litigation.
11. Non disclosure and non compete clauses
12. Dispute resolution.
13. Administration of liabilities. (Source: Inc. online)

African Economies must begin to place premium on its businesses, especially the Small and medium scale enterprises which makes up about 90% of African economy. These businesses have the potentials to grow into billion dollars incorporations if it has access to the needed oxygen and climate for growth and development.
The opportunities provided by partnership can be harnessed more by the young hence, African young professionals such as Lawyers, Doctors, Pharmacists, Engineers, Tech  experts and developers need to look into major partnership among themselves to create new systems and pragmatic ways of delivering solutions, while solving the menace of unemployment. A partnership of young doctors can invent innovative ways of medical health care delivery, and an interesting addition of business developers can see to the unveiling of uncharted courses in the quest of providing better alternatives and answers to health care challenges. Young lawyers can also leverage on this to form legal partnerships, having partners with different specialization to give wholesale legal services in ways that are unconventional, while building their personal profiles and finances.
The world awaits and is already experiencing the fourth industrial revolution which will shape the economies and jobs of tomorrow. This era is expected to witness a new world of digitization, dependence on technology and machines, internet based solutions and services, robotics among others. To survive in this new millennium, one must dare to be different, only the unique will be able to raise their head from among a sea of heads. Society will always reward outlanders, creators and world shapers, but with every deposit of ideas, innovation and creativity a good team of executors must structuralise the ideas and concepts into practicable solutions, turning dreams to goals and goals to realities, to achieve this, the idea of partnership is most pragmatic for Africa’s young.

David  Etido  has interests in Business Law/Commercial Law- Economics- Intellectual Property Law – Technology law, and is keen on seeing a radical growth in the African Business Environment.