Capital contribution clause: sample for partnerships and joint ventures

Sample clause

Written for partnership agreement of Harbourline Physiotherapy, a fictional two partner practice in Newcastle NSW.

Capital. (a) Initial capital. Each Partner contributes the following capital on the Commencement Date: Partner A, $60,000 in cash; Partner B, $35,000 in cash and the treatment equipment listed in Schedule 2, agreed at a value of $25,000. (b) Capital accounts. The capital contributed by each Partner is recorded in a separate capital account. No interest is paid on capital. (c) Further capital. The Partners may by unanimous written decision call for further capital in proportion to their capital accounts, to be paid within 30 days. (d) Withdrawal. A Partner may not withdraw capital while the partnership continues, except with the written agreement of all Partners. (e) On leaving. A departing Partner is repaid the balance of their capital account, adjusted for their share of profits and losses to the leaving date, within 90 days.

Sample wording, not legal advice.

Variants

What to negotiate

• Value non cash contributions now

  Equipment, a client list or a lease brought into the business should be valued in the agreement, ideally with a schedule or an independent valuation. A contribution with no agreed value becomes a dispute when the business is sold. The value also matters for tax and for each partner's share on exit.

• Capital is not the profit share

  Partners can contribute different amounts of capital and still share profits equally, or the reverse. Under the partnership acts, partners share capital and profits equally unless they agree otherwise, so the agreement should state both separately. Interest on capital is one way to reward a partner who put in more without changing the profit split.

• Calls and defaults

  A clause that allows further capital calls should say who decides, the time to pay, and what happens if a partner does not pay: dilution, interest on the shortfall, or a right for the other partner to fund it and recover it from future distributions, as the joint venture example does.

The risk of leaving it out

Without a capital contribution clause, the partnership acts' default rules apply, and partners share capital equally whatever each actually put in. A partner who contributed most of the money can find, on a sale or dissolution, that the law treats the capital as shared equally unless they can prove an agreement otherwise.

The default rule in the partnership acts

Each Australian state has a partnership act with similar default rules. In Victoria, the Partnership Act 1958 provides that, subject to any agreement, partners are entitled to share equally in the capital and profits of the business, and that a partner is not entitled to interest on capital before profits are ascertained. A written clause overrides those defaults. That is why the sample records each partner's contribution and its value. Law checked on 21 October 2026. This page explains how the law works and is not legal advice.

Capital accounts and current accounts

Many partnerships keep two accounts for each partner: a capital account for long term contributions and a current account for profit shares and drawings. Keeping them separate stops drawings eating into capital without anyone noticing, and makes the exit calculation straightforward. The partnership agreement example sets out capital, then profits, losses and drawings, in that order.

Joint ventures and companies

In an unincorporated joint venture, participants usually contribute in agreed percentages and fund costs by cash calls, as the joint venture example does with a 55 to 45 split and a working capital figure. In a company, capital is contributed by subscribing for shares and is governed by the constitution and the Corporations Act, which is a different structure; a shareholders agreement then deals with future funding.

Where the clause sits in a generated document

Partnership agreements and joint venture agreements carry this clause near the start. When asking the AI document generator for one, list each person's contribution, the value of non cash items, whether interest is paid on capital, how calls work and how capital is repaid on exit.

Documents that carry this clause

Partnership agreement templateThree physiotherapists have run one Newcastle practice together since 2024 without anything in writing. This agreement records what the handshake never covered: uneven capital sitting beside uneven hours, the six decisions no partner can make alone, and what a leaving partner is owed.Joint venture agreement template with contributions and splitAn unincorporated joint venture has no company to fall back on, so everything a company structure would supply has to be written down. This one puts two builders together for a single $14.6 million refurbishment, splits it 55/45, and sets out who funds it, who decides, how a deadlock breaks and how either of them gets out.

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