Partnership Agreement
Create a customized Partnership Agreement for HVAC Contractor in Texas. Protect against refrigerant leak liability, ensure EPA 608 compliance, and address Texas Business
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When two licensed HVAC technicians decide to combine forces in Dallas to service commercial rooftop units and residential ductwork installations, a handshake deal quickly turns sour after one partner... Read more
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Legal Document
This Partnership Agreement (the "Agreement") is entered into as of [effective_date] (the "Effective Date"), by and among the Partners listed herein. Each signatory may be referred to individually as a "Partner" and collectively as the "Partners."
WHEREAS, the Partners desire to form a general partnership under the laws of the State of [state_law] for the purpose of conducting the business described herein;
WHEREAS, the Partners wish to set forth their respective rights, duties, and obligations with respect to the formation, operation, and governance of the Partnership;
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Partners agree as follows:
The Partners hereby form a general partnership (the "Partnership") under the laws of the State of [state_law], effective as of the Effective Date. The Partnership shall be known and conducted under the name [business_name] (the "Partnership Name"). The Partners shall execute and file all certificates and documents, including any amendments thereto, as may be required by the laws of the State of [state_law] or any other jurisdiction in which the Partnership conducts business. The principal place of business of the Partnership shall be at such location as the Partners may from time to time determine by mutual written agreement.
The purpose of the Partnership (the "Business Purpose") shall be to engage in the following business activities: [business_purpose] The Partnership may also engage in any and all activities that are reasonably related or incidental to the foregoing Business Purpose, and such other lawful business activities as the Partners may from time to time agree upon in writing. The Partnership shall not engage in any business activity outside the scope of the Business Purpose without the prior unanimous written consent of all Partners.
Each Partner shall contribute capital to the Partnership as set forth in Schedule A attached hereto (the "Initial Capital Contributions"). The capital contributions and ownership percentages of each Partner are as agreed upon by the Partners and recorded at the time of signing. The Initial Capital Contributions shall be deposited into the Partnership's designated bank account promptly upon receipt. No Partner shall be required to make any additional capital contribution beyond the Initial Capital Contribution without such Partner's prior written consent. If additional capital is required for the Partnership's operations, the Partners shall discuss and agree upon the terms of any additional contributions in writing. No Partner shall withdraw any portion of such Partner's capital contribution without the prior written consent of all Partners. No interest shall accrue or be paid on any capital contribution unless otherwise agreed in writing by all Partners.
The ownership interests of each Partner in the Partnership (the "Ownership Interests") shall be as set forth in Schedule A attached hereto, which lists each Partner's name, capital contribution, and ownership percentage. Each Partner's Ownership Interest reflects such Partner's proportionate share of the Partnership's assets, liabilities, and equity. The Ownership Interests may be amended only by unanimous written consent of all Partners.
The net profits and net losses of the Partnership for each fiscal year shall be determined in accordance with generally accepted accounting principles ("GAAP") consistently applied, and shall be allocated among the Partners as follows:
The Partnership shall be managed jointly by the Partners. Each Partner shall have an equal voice in the management and conduct of the Partnership's business, and all decisions relating to the ordinary course of business may be made by a majority vote of the Partners. Notwithstanding the foregoing, the following actions shall require the prior unanimous written consent of all Partners: (a) the sale, lease, exchange, or other disposition of all or substantially all of the Partnership's assets; (b) the merger or consolidation of the Partnership with any other entity; (c) any amendment to this Agreement; (d) the incurrence of any indebtedness in excess of $10,000 or such other amount as the Partners may agree upon in writing; (e) the commencement or settlement of any litigation on behalf of the Partnership; (f) the admission of any new Partner; (g) the engagement in any business activity outside the scope of the Business Purpose; and (h) the dissolution or winding up of the Partnership. Each Partner shall devote such time, attention, and effort to the Partnership's business as is reasonably necessary to promote the interests of the Partnership. No Partner shall receive a salary or other compensation for services rendered to the Partnership except as unanimously agreed upon by all Partners in writing.
The Partnership shall maintain one or more bank accounts at a financial institution selected by mutual agreement of the Partners. All funds of the Partnership shall be deposited in such accounts, and all withdrawals and expenditures shall be made only for Partnership purposes. Checks, drafts, or other instruments for payment of money drawn on the Partnership's accounts in excess of $5,000 shall require the signatures of both Partners. The Partnership shall maintain complete and accurate books of account and other records of the Partnership's business and affairs at the Partnership's principal place of business. Such books and records shall be maintained in accordance with generally accepted accounting principles ("GAAP"), consistently applied, and shall be open to inspection and examination by any Partner or such Partner's authorized representative at any reasonable time during normal business hours. The fiscal year of the Partnership shall be the calendar year. Within ninety (90) days after the close of each fiscal year, the Partnership shall cause to be prepared and delivered to each Partner a complete set of the Partnership's financial statements for such fiscal year, including a balance sheet, income statement, and statement of cash flows, prepared in accordance with GAAP. The Partnership shall file all required federal, state, and local tax returns and shall furnish each Partner with such information as may be necessary for the preparation of such Partner's individual tax returns.
No person or entity shall be admitted as a new Partner of the Partnership without the prior unanimous written consent of all existing Partners. Any admission of a new Partner shall be conditioned upon such new Partner's execution of a written instrument agreeing to be bound by all terms and conditions of this Agreement, as amended to reflect the admission. Upon the admission of a new Partner, the Ownership Interests and profit and loss allocation ratios of all Partners shall be adjusted as mutually agreed upon in writing. The incoming Partner shall make such capital contribution as the existing Partners may require. No admission of a new Partner shall cause a dissolution of the Partnership, and the Partnership shall continue without interruption.
Any Partner may voluntarily withdraw from the Partnership by providing not less than ninety (90) days' prior written notice to all other Partners. Upon the withdrawal of a Partner, the remaining Partner(s) shall have the option, exercisable within thirty (30) days of receiving such notice, to purchase the withdrawing Partner's Ownership Interest at its fair market value as determined by an independent appraiser mutually agreed upon by the Partners. If the remaining Partner(s) elect not to purchase the withdrawing Partner's Ownership Interest, the Partnership shall be dissolved in accordance with this Section. The Partnership shall be dissolved upon the occurrence of any of the following events: (a) the unanimous written agreement of all Partners to dissolve; (b) the withdrawal, death, incapacity, or bankruptcy of any Partner, unless the remaining Partner(s) elect to continue the Partnership within sixty (60) days of such event; (c) the entry of a judicial decree of dissolution; or (d) any event that makes it unlawful for the Partnership to continue its business. Upon dissolution, the Partnership's affairs shall be wound up in an orderly manner. The Partnership's assets shall be liquidated and the proceeds applied in the following order of priority: (i) to the payment of debts and obligations owed to creditors of the Partnership, including Partners who are creditors; (ii) to the establishment of any reserves that the Partners deem reasonably necessary for contingent or unforeseen liabilities; (iii) to the return of each Partner's Capital Contribution; and (iv) to the Partners in accordance with their respective Ownership Interests.
During the term of this Partnership and for a period of two (2) years following a Partner's withdrawal or the dissolution of the Partnership (the "Restricted Period"), no Partner shall, directly or indirectly, engage in, own, manage, operate, control, consult for, or participate in any business that competes with the Business Purpose of the Partnership within a fifty (50) mile radius of the Partnership's principal place of business (the "Restricted Area"), without the prior written consent of the other Partner(s). For purposes of this Section, "compete" means engaging in any business activity that is substantially similar to the business conducted by the Partnership. This restriction shall not prohibit a Partner from owning, solely as a passive investment, less than five percent (5%) of the outstanding securities of any publicly traded company. Each Partner acknowledges that the restrictions contained in this Section are reasonable and necessary to protect the legitimate business interests of the Partnership and the other Partner(s), and that any breach of these restrictions would cause irreparable harm for which monetary damages would be an inadequate remedy. Accordingly, in the event of any breach or threatened breach of this Section, the non-breaching Partner(s) shall be entitled to seek injunctive relief, specific performance, and any other equitable remedies, in addition to any other rights and remedies available at law.
In the event of any dispute, controversy, or claim arising out of or relating to this Agreement or the Partnership's business (a "Dispute"), the Partners shall first attempt to resolve the Dispute through good faith negotiation. Either Partner may initiate the negotiation process by delivering written notice of the Dispute to the other Partner, and the Partners shall meet within fifteen (15) days of such notice to attempt to resolve the Dispute. If the Partners are unable to resolve the Dispute through negotiation within thirty (30) days of the initial written notice, either Partner may submit the Dispute to mediation administered by the American Arbitration Association ("AAA") or such other mediation service as the Partners may mutually agree upon. The mediation shall be conducted in the State of [state_law] by a single mediator mutually selected by the Partners. The costs of mediation shall be shared equally by the Partners. If the Dispute is not resolved through mediation within sixty (60) days of the initial written notice, either Partner may submit the Dispute to binding arbitration administered by the AAA in accordance with its Commercial Arbitration Rules. The arbitration shall be conducted in the State of [state_law] by a single arbitrator. The decision of the arbitrator shall be final and binding upon the Partners and may be enforced in any court of competent jurisdiction. The prevailing Party in any arbitration proceeding shall be entitled to recover its reasonable attorneys' fees and costs from the non-prevailing Party.
This Agreement shall be governed by and construed in accordance with the laws of the State of [state_law], including the Uniform Partnership Act as adopted in such State, without regard to its conflict of laws principles. To the extent any Dispute is not subject to arbitration under Section 11 of this Agreement, each Partner hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts located within the State of [state_law] and waives any objection to venue or jurisdiction in such courts.
Entire Agreement. This Agreement, together with any exhibits, schedules, or attachments hereto, constitutes the entire agreement between the Partners with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations, and discussions, whether oral or written, relating to the Partnership. Amendments. No amendment, modification, or supplement to this Agreement shall be valid or binding unless made in writing and duly executed by all Partners. Waiver. No waiver of any provision of this Agreement shall be effective unless made in writing and signed by the waiving Partner. The failure of any Partner to enforce any right or provision of this Agreement shall not constitute a waiver of such right or provision or of any subsequent breach thereof. Severability. If any provision of this Agreement is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, the remaining provisions shall continue in full force and effect. The invalid or unenforceable provision shall be modified to the minimum extent necessary to make it valid and enforceable while preserving the Partners' original intent. Notices. All notices, requests, demands, and other communications under this Agreement shall be in writing and shall be deemed duly given when delivered personally, sent by certified mail (return receipt requested, postage prepaid), or sent by nationally recognized overnight courier to the addresses set forth herein or to such other address as any Partner may designate by written notice to the other Partner(s). No Assignment. No Partner may assign, transfer, pledge, or encumber such Partner's Ownership Interest in the Partnership, in whole or in part, without the prior unanimous written consent of all other Partners. Any purported assignment in violation of this Section shall be null and void and of no force or effect. Further Assurances. Each Partner shall execute and deliver such additional documents and instruments and take such further actions as may be reasonably necessary to carry out the purposes and intent of this Agreement. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Force Majeure. No Partner shall be liable for any delay or failure to perform such Partner's obligations under this Agreement to the extent that such delay or failure is caused by circumstances beyond such Partner's reasonable control, including but not limited to acts of God, natural disasters, war, terrorism, riots, embargoes, labor disputes, government orders, or pandemic.
Each partner represents and warrants that they hold current EPA Section 608 certification as required by 40 CFR Part 82, Subpart F, and the Texas Commission on Environmental Quality regulations. The partner who physically handles, recovers, or disposes of any refrigerant shall bear sole responsibility for any fines, cleanup costs, or third-party claims arising from violation of these standards. The partnership shall maintain a refrigerant usage log compliant with EPA recordkeeping requirements. In the event of a leak or improper disposal, the responsible partner shall indemnify and hold harmless the partnership and all other partners from any liability under the Texas Deceptive Trade Practices Act or federal environmental statutes. Failure to maintain certification constitutes immediate grounds for expulsion and mandatory buyout at 70% of the otherwise applicable valuation.
All partners shall maintain active HVAC Contractor Licenses issued by the Texas Department of Licensing and Regulation (TDLR) pursuant to Texas Occupations Code §1301.351 et seq. Any partner whose license is suspended or revoked must immediately notify the remaining partners in writing. The partnership shall not perform any work requiring a TDLR license using an unlicensed partner. The agreement incorporates by reference all TDLR continuing education and insurance requirements. A partner’s loss of licensure triggers an automatic buy-sell provision calculated under the valuation method selected in this Agreement. This provision is intended to prevent violations of Texas licensing laws that could expose the entire partnership to administrative penalties and consumer lawsuits.
The partnership agrees that all installed equipment shall meet or exceed the minimum SEER ratings and load calculation standards published by the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) as incorporated into the International Energy Conservation Code as adopted by Texas municipalities. Partners shall jointly approve any deviation from these standards in writing. Any partner who authorizes installation of equipment that fails to meet the SEER rating warranty stated in the customer contract shall personally indemnify the partnership for any repair, replacement, or DTPA damages resulting from such failure. This clause is designed to allocate risk for the common HVAC industry claim that promised energy efficiency was not achieved, protecting the firm from joint liability under Texas consumer protection statutes.
The partnership shall maintain an OSHA-compliant safety program meeting the requirements of 29 CFR §1926 for construction activities and 29 CFR §1910 for general industry tasks performed by HVAC technicians, including fall protection, confined-space entry, and hazardous material handling. Partners shall ensure all employees receive training on refrigerant safety and ductwork installation hazards. The agreement requires each partner to carry individual workers’ compensation coverage or ensure the partnership policy names them appropriately. Any partner whose negligent failure to follow OSHA standards results in a citation or injury claim shall indemnify the partnership. This provision is required to maintain eligibility for Texas construction contracts and to limit exposure under the Texas Labor Code.
[service vehicle details]
IN WITNESS WHEREOF, the Partners have executed this Partnership Agreement as of the Effective Date first written above. Each Partner represents that the individual signing below has the full authority to bind such Partner to the terms and conditions of this Agreement and to enter into the Partnership formed hereby.
Partner 1
Name: Partner 1
Date: ___________________
When two licensed HVAC technicians decide to combine forces in Dallas to service commercial rooftop units and residential ductwork installations, a handshake deal quickly turns sour after one partner orders non-compliant R-410A refrigerant that triggers an EPA Section 608 violation and a $14,000 fine from the Texas Commission on Environmental Quality. Without a properly drafted Partnership Agreement for HVAC Contractor in Texas, the innocent partner can still face joint and several liability for the entire penalty plus any equipment failure claims when a mismatched SEER-rated condenser causes a homeowner’s air conditioning system to fail during a 105-degree heat wave. Texas law under Tex. Bus. & Com. Code § 15.50 and the community-property rules make every asset—including tools, service vans, and customer lists—vulnerable in disputes. Our generator produces a Texas-specific agreement that allocates refrigerant handling responsibilities, mandates ASHRAE load calculation standards, requires proof of current TDLR HVAC contractor licensing, and includes detailed buy-sell provisions tied to OSHA safety records. This prevents the common pain point where one partner’s failure to maintain EPA certification exposes the entire firm to DTPA consumer-protection lawsuits from homeowners claiming misrepresented energy-efficiency guarantees. Stop relying on default Texas partnership statutes that ignore industry realities like warranty disputes over compressor replacements and scope-of-work changes on duct sealing projects. Lock in profit-sharing that reflects each partner’s contribution of specialized load-calculation software, customer relationships, and EPA-certified technicians before the next summer surge begins.
Beyond the standard partnership agreement sections, this template adds fields specific to HVAC Contractor:
A Partnership Agreement legally establishes the rights, responsibilities, and obligations of each partner involved in a business partnership. Its core purpose is to detail how the partnership will operate, distribute profits and losses, and outline procedures for resolving disputes and handling eventualities such as withdrawal or death of a partner.
Refrigerant Leak Liability
Inclusion of waiver and compliance assurance in contracts, adherence to EPA Section 608 protocols, and documentation of proper handling procedures.
Equipment Failure Claims
Detailed warranty and maintenance clauses in contracts, specifying limited liability and required maintenance schedules.
Property Damage
Inclusion of indemnification clauses and limitation of liability provisions within contracts. Proof of insurance coverage may also be stipulated.
For this partnership agreement to be legally valid:
Common mistakes to avoid:
EPA Section 608
Governs the handling and disposal of refrigerants. HVAC contractors must be certified under this regulation to purchase and handle refrigerants legally.
Enforced by Environmental Protection Agency (EPA)
ASHRAE Standards
Provides standards for energy efficiency and indoor air quality, including SEER (Seasonal Energy Efficiency Ratio) ratings for equipment. Though ASHRAE itself is not a regulatory body, its standards are often incorporated into building codes.
Enforced by American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE)
OSHA Safety Standards
Regulates workplace safety relevant to HVAC tasks, including fall protection, confined spaces, and handling of hazardous materials.
Enforced by Occupational Safety and Health Administration (OSHA)
State Licensing Laws
Most states require HVAC contractors to hold a specific license, which usually includes passing an exam and meeting certain experience or education standards.
Enforced by State Licensing Boards
Recommended coverage: General Liability Insurance · Professional Liability Insurance (Errors and Omissions) · Workers' Compensation Insurance · Pollution Liability Insurance
Yes. While Texas does not mandate a written partnership agreement for general partnerships, HVAC contractors should never operate without one. Under Tex. Bus. & Com. Code § 26.01, any agreement that cannot be performed within one year must be in writing. More importantly, the agreement must address industry-specific risks such as joint liability for EPA Section 608 refrigerant violations and TDLR license compliance. Without clear terms on management of service trucks, refrigerant inventory, and ASHRAE SEER rating warranties, state default rules will apply and may force equal sharing of losses even when one partner caused an equipment failure claim.
The agreement includes an indemnification clause that requires the partner responsible for refrigerant handling to indemnify the partnership for any fines or third-party claims arising from failure to follow EPA Section 608 protocols. It mandates that all partners maintain current EPA 608 certification and follow TCEQ disposal requirements. This is critical because Texas courts have held partners jointly liable for environmental violations even when only one individual performed the improper recovery. The clause also requires documentation of every refrigerant transaction to defend against DTPA claims from customers alleging improper installation.
Yes, but they must comply with Tex. Bus. & Com. Code § 15.50 which requires non-competes to be ancillary to an otherwise enforceable agreement and reasonable in time, geography, and scope. Our template allows you to restrict a departing partner from soliciting former clients for 18 months within the Texas counties you designate. The covenant is tied to protection of the partnership’s customer lists, load calculation data, and goodwill—elements courts have upheld when the agreement also contains buyout provisions based on a formula using the partnership’s service-van and tool inventory values.
The agreement provides an immediate buyout trigger if any partner loses their Texas Department of Licensing and Regulation (TDLR) HVAC contractor license or EPA Section 608 certification. A predetermined valuation formula based on the partnership’s current accounts receivable, inventory of ductwork materials, and service equipment is applied. This prevents an unlicensed partner from continuing to manage jobs, which would expose the firm to both administrative penalties and consumer lawsuits under the Texas Deceptive Trade Practices Act (DTPA).
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