Understanding the Full-Time Intention Clause in a Partnership Agreement

Understanding the Full-Time Intention Clause in a Partnership Agreement

When two or more people decide to start a business together, they often create a partnership agreement. This document outlines how the business will run, how decisions are made, and how profits and responsibilities are shared. One important but often overlooked part of this agreement is the “full-time intention clause.” Let’s break down what it means, why it matters, and what could go wrong without it—using simple language and real-life examples.

What Is a Full-Time Intention Clause?

A full-time intention clause is a sentence or paragraph in a partnership agreement that clearly states each partner’s intention to work on the business full time. It doesn’t necessarily mean every partner must work 40 hours a week, but it shows a shared understanding that the business is their main focus and priority.

A real life example that happened to a friend of mine – 2 friends got laid off and decided to open a coffee shop together. Unknown to 1 of the partners, the other partner actively sought a new employment. Once the other partner obtain a new job, she still continued to contribute but very limited (as she is a full time employee elsewhere). Issues occured on the partners contribution to the coffee shop. As expected, partners part ways. What their partnership agreement need was a full-time intention clause that says both of them plan to manage the shop daily, handle operations, and grow the business as their primary job. This sets the expectation that they’re both fully committed.

Why Is It Important?

1. Sets Clear Expectations
   Without this clause, one partner might assume the other is equally involved, only to find out later that they’re working another job or spending little time on the business. The clause helps avoid misunderstandings by putting everyone’s commitment in writing.

   Example: If Abu starts spending only a few hours a week at the coffee shop while Mamat works six days a week, tension builds. But if the agreement says both are expected to treat the business as their main job, Abu can’t claim he never knew that was expected.

2. Protects Against Free-Riding
   Sometimes, one partner does most of the work while the other collects profits. A full-time intention clause makes it harder for a partner to take a passive role while still getting an equal share.
3. Helps with Decision-Making and Trust
   When partners know each other is fully committed, they’re more likely to trust one another and collaborate effectively. It builds a sense of fairness and shared responsibility.
4. Supports Future Agreements
   If the business grows and needs to hire employees or bring in investors, having a clear record of each partner’s role and commitment can make those conversations smoother.

What Happens Without This Clause?

Without a full-time intention clause, several problems can arise:

• Unequal Effort, Equal Pay
  One partner may end up doing most of the work while profits are split 50/50. This leads to frustration and conflict.

  Example: Siti and Nurhaliza open a graphic design studio. Siti works full time, answering client calls, designing logos, and managing projects. Nurhaliza only helps occasionally but still takes half the profits.

• Misaligned Priorities
  One partner might treat the business like a side hustle while the other is trying to build a full-time career. This can slow growth and create resentment.
• Harder to Resolve Disputes
  If a disagreement arises about time commitment, there’s no written agreement to refer back to. This can lead to arguments, damaged relationships, or even the breakup of the business.
• Problems When Scaling
  If the business needs to apply for a loan or attract investors, banks or investors may question the stability of the partnership if one partner isn’t actively involved.

Can the Clause Be Flexible?

Yes! A full-time intention clause doesn’t have to be rigid. It can include flexibility—for example, allowing a partner to work another job temporarily or take time off for personal reasons, as long as they communicate and agree with the other partner.

The key is to be honest and upfront. The clause simply ensures that everyone starts with the same understanding of commitment.

Final Thoughts

Don’t assume anyone who wants to start a business with you will do it full time and commit fully to the business. That is why a full-time intention clause may seem like a small detail, but it plays a big role in keeping a partnership healthy and fair. It’s not about micromanaging time—it’s about honoring the spirit of the partnership and making sure everyone is on the same page.

Think of it like setting the rules before a team game: if everyone agrees on how the game is played, there’s less arguing later. The same goes for business. By including a full-time intention clause, partners protect their relationship, their business, and their shared dream.

So, if you’re starting a business with someone, take the time to talk about how involved each of you plans to be—and put that understanding in writing. It could save a lot of headaches down the road.