Two people decide to go into business together. One has thirty years in the trade and a truck. The other has one hundred fifty thousand dollars and a spreadsheet. They shake hands in a parking lot in Frederick, or over coffee in Rockville, or across a kitchen table in Lancaster. They agree on the important things: what the company will do, who will handle which side of it, and that they will “figure out the rest as we go.”

Here is what almost none of them realize. They did not postpone the rest. They adopted it. The moment two people begin carrying on a business as co-owners for profit, Maryland and Pennsylvania each supply a complete set of rules governing profits, voting, authority, compensation, exits, and dissolution. Those rules are enforceable law, and they govern to the extent the owners’ agreement (written, oral, or implied) does not provide otherwise, subject to nonwaivable rules and any independent writing requirement that may apply.

The rules are also, in most cases, not what the owners would have chosen. They split profits in ways that ignore who funded the company. They give a minority owner veto power over decisions the majority owner assumed were theirs. They let one person walk out and trigger the wind-up of a profitable business. They deny a salary to the person doing all the work. They make each owner an agent capable of binding the company to contracts the others never saw.

A partnership agreement is how you replace those defaults with terms you actually chose. It is the single highest-leverage document a co-owned business will ever sign, and it is the one most owners skip, because on the day it should be drafted, everyone still likes each other.

This guide explains how partnerships form in Maryland and Pennsylvania without any filing at all, what each state’s default rules actually say for both general partnerships and multi-member LLCs, what belongs in a well-drafted agreement, what the law will not let you contract around, and what changes in Maryland on October 1, 2026.

Business owners use “partnership agreement” loosely, to mean any agreement among the people who own a company together. That is a perfectly reasonable way to talk. But the entity you chose determines which statute supplies the default terms when your document is silent, and those statutes are not interchangeable.

The practical translation: if you and a co-owner formed a Maryland LLC, the document you need is an operating agreement under Title 4A, and the defaults that fill your gaps come from Title 4A. If you did not form another entity and instead began carrying on a business together as co-owners for profit, you may have formed a general partnership, and Title 9A governs to the extent the partnership agreement does not provide otherwise. Those two sets of defaults reach different results on the same facts, which is the theme of everything below.

Pennsylvania’s structure came from Act 170 of 2016, which replaced the Commonwealth’s prior partnership and LLC statutes with new chapters modeled on the uniform acts. It took effect February 21, 2017 for entities formed on or after that date, and April 1, 2017 for every existing entity, regardless of when it was formed. If your Pennsylvania company predates 2017 and its agreement has not been reviewed since, it was drafted against a statute that no longer exists.

This is the provision most business owners have never read, and it is the foundation of everything else.

Under Md. Code, Corporations and Associations, Section 9A-202(a), the unincorporated association of two or more persons to carry on as co-owners a business for profit forms a partnership, whether or not the persons intend to form a partnership, and whether or not the association is called a partnership, a joint venture, or any other name.

Pennsylvania says the same thing at 15 Pa.C.S. Section 8422(a): the association of two or more persons to carry on as co-owners a business for profit forms a partnership, whether or not the persons intend to form a partnership.

Read those clauses again. Intent is irrelevant. You can sincerely believe you are not partners. You can have told each other you are not partners. If the substance of the arrangement is co-ownership of a business for profit, the partnership exists, along with every default rule attached to it, including joint and several personal liability.

The profit-sharing presumption

Both states go further. Under Section 9A-202(d)(3) in Maryland and 15 Pa.C.S. Section 8422(c)(3) in Pennsylvania, a person who receives a share of the profits of a business is presumed to be a partner in that business. The presumption is rebuttable, and both statutes list the same categories of payments that do not trigger it, including payments of a debt by installments, compensation to an employee or an independent contractor, rent, retirement or health benefits to a former partner or their beneficiary, interest or other charges on a loan even where the payment amount varies with profits, and installment payments for the sale of goodwill or other property.

That list matters because it is how a profit-share arrangement is kept from becoming an accidental partnership. If you pay a salesperson a cut of the revenue, or you promise a lender a return that floats with profits, the structure and the documentation determine whether you have created a compensation arrangement, a loan, or a co-owner with management rights and a claim on the business. Related risk on the employment side is covered in our guide to worker misclassification in Maryland.

Both statutes also confirm what does not, by itself, create a partnership. Co-ownership of property in any form does not establish a partnership, even where the co-owners share the profits produced by that property. Sharing gross returns does not establish a partnership either, even where the parties hold a common interest in the property generating them.

This is the section worth printing. The table below sets out what generally happens in each state, for each entity, when the governing agreement says nothing. Most entries are statutory defaults that a properly drafted agreement may change, subject to nonwaivable limits. External liability and third-party rights are different: an internal agreement generally cannot eliminate a claimant’s statutory rights or the personal-liability rules applicable to a general partnership.

Why the money column is the one that starts fights

Look at the first row across all four columns. Suppose two owners put in one hundred fifty thousand dollars and ten thousand dollars respectively.

• Maryland LLC. Under Section 4A-503, profits and losses are allocated in proportion to respective capital contribution values, and distributions follow the right to share in profits. The ten thousand dollar member receives a small fraction. The one hundred fifty thousand dollar member receives most of it.
• Pennsylvania LLC. Under 15 Pa.C.S. Section 8844(a), any distribution made before dissolution and winding up is in equal shares among members and persons dissociated as members. Ownership percentage does not control. Capital does not control. It is fifty-fifty.
• General partnerships. A Maryland partner is entitled to an equal share of profits under Section 9A-401(b). A Pennsylvania partnership’s pre-dissolution distributions are made in equal shares under Section 8445(a); current Pennsylvania Title 15 does not separately state an equal allocation of accounting profits and losses.

Same two people. Same money. Three different answers depending on the state line and the entity. And in Pennsylvania, the default runs against the person who funded the company, which is the opposite of what most investors assume when they wire the money.

Maryland’s LLC default creates its own trap in the mirror image. Because Section 4A-503 keys the allocation to capital contribution values, and because voting under Section 4A-403(b)(1) follows the interests in profits determined under Section 4A-503, an owner who contributes expertise, labor, customer relationships, or intellectual property rather than cash can find that their profit share and their vote both depend on a dollar value nobody ever recorded. If the contribution has no documented value, the argument about what it was worth happens later, in the middle of a dispute.

The authority split

The agency row deserves separate attention, because Maryland and Pennsylvania reach opposite conclusions for LLCs.

Under Md. Code, Corporations and Associations, Section 4A-401(a)(1), each member of a Maryland LLC is an agent of the company for the purpose of its business, except as provided in the operating agreement or where the articles of organization contain a statement limiting members’ authority to act solely by virtue of being members. The act of a member carrying on the business in the usual way binds the LLC unless that member in fact lacked authority and the person dealing with them had actual knowledge of it.

Under 15 Pa.C.S. Section 8831, a member of a Pennsylvania LLC is not an agent of the company solely by reason of being a member.

The practical consequence is that an operating-agreement restriction addresses the member’s actual authority inside the company, but a usual-course act may still bind the LLC unless the counterparty actually knows the member lacks authority. A limiting statement in the articles of organization filed with SDAT changes the third-party rule: a member is no longer an agent solely by virtue of membership, and persons dealing with a member are presumed to know that limitation. Even then, a counterparty may still prove actual agency or estoppel under Section 4A-401(b). In Pennsylvania, membership alone does not create agency, so the agreement should affirmatively identify who has authority to bind the company.

If you are operating a general partnership, this is the exposure that should concentrate your attention.

Under Md. Code, Corporations and Associations, Section 9A-306(a), all partners are liable jointly and severally for all obligations of the partnership unless otherwise agreed by the claimant or provided by law. Pennsylvania is identical at 15 Pa.C.S. Section 8436(a).

Joint and several liability means a creditor is not confined to your ownership share. If your partner signs a contract the partnership cannot perform, or commits a tort in the course of the business, a claimant can come after you personally for the entire amount and let you sort out contribution afterward. Combine that with the agency rule (each partner is an agent of the partnership in both states) and the picture is complete: your co-owner can create an obligation without asking you, and you can be made to pay all of it.

Both states protect an incoming partner’s personal assets from pre-admission partnership obligations, but they phrase the rule differently. Maryland Section 9A-306(b), through Courts and Judicial Proceedings Section 5-420, treats the incoming partner as liable for pre-admission obligations but permits satisfaction only from partnership property. Pennsylvania Section 8436(b) provides that an incoming partner is not personally liable for a partnership debt, obligation, or other liability incurred before admission.

What actually limits the exposure

• Register as a limited liability partnership. Maryland’s LLP shield appears at Section 9A-306(c), which relieves a partner of liability for partnership obligations incurred while the partnership is an LLP, solely by reason of being a partner. Section 9A-306(d) preserves liability for the partner’s own negligent or wrongful acts, and for negligent supervision of the person who committed them. Pennsylvania’s counterpart limitation is at 15 Pa.C.S. Section 8204.
• Operate through an LLC or a corporation. Pennsylvania states the LLC shield directly at 15 Pa.C.S. Section 8834(a): a debt, obligation, or other liability of the company is solely the company’s, and a member or manager is not personally liable for it solely by reason of being or acting as a member or manager, regardless of whether the company has one member or many. Choosing between structures is covered in our guide to LLC versus corporation, and the state-of-formation question in our Maryland and Pennsylvania formation guides.
• Respect the entity once you have it. An LLC or corporate liability shield is not absolute. Personal liability may arise from an owner’s own conduct, a personal guaranty, or misuse of the entity that, under the demanding veil-piercing standards applicable in the governing state, warrants disregarding its separate existence. Commingling and undercapitalization may be relevant facts, but they do not automatically pierce the veil. Pennsylvania law specifically provides that failure to observe entity formalities, by itself, is not a ground for imposing liability on an interest holder or governor for an association’s debts. For both states’ standards, see our guide to piercing the corporate veil in Maryland and Pennsylvania.

Every provision below exists to override a default that would otherwise apply, or to answer a question the statute leaves open. The list is not decoration. Each item corresponds to a real dispute that arrives in a business lawyer’s office on a regular basis.

Money in

• Initial capital contributions, with values assigned to everything that is not cash. This is the highest-value paragraph in a Maryland LLC agreement, because Section 4A-503 keys both the profit allocation and, through Section 4A-403(b)(1), the voting weight to capital contribution values. Property, services, and intellectual property need a stated dollar value in the records or the fight happens later.
• Additional contributions and capital calls. What happens when the business needs more money. Who must contribute, on what notice, and what the consequence is for a member who cannot or will not.
• Dilution and default remedies. If an owner misses a capital call, does their percentage shrink, does the contributed amount become a loan, or is there no remedy at all.
• Loans from owners. Both states treat a partner’s payment or advance beyond agreed capital as a loan to the partnership that accrues interest from the date of the advance, under Section 9A-401(d) and (e) in Maryland and Section 8441(b)(2) and (f) in Pennsylvania. Document these deliberately rather than discovering the characterization later.

Money out

• Profit and loss allocation. State it explicitly. In a Pennsylvania LLC, a pro rata distribution clause is the single most valuable provision in the document, because without it Section 8844(a) pays every distribution in equal shares.
• Distribution timing and discretion. Pennsylvania makes this urgent: under Section 8844(b), a person has no right to a distribution before dissolution unless the company decides to make an interim distribution, and under Section 8844(c) no right to receive a distribution in any form other than money. A minority owner with no distribution right and no salary has no cash flow at all.
• Tax distributions. In a pass-through entity, owners owe tax on allocated income whether or not cash was distributed. A mandatory tax distribution clause prevents an owner from receiving a K-1 and a tax bill with no money to pay it. Related reading: our guide to the S corporation election for Maryland LLCs.
• Compensation for work. Address it directly. In a general partnership, Section 9A-401(h) in Maryland and Section 8441(i) in Pennsylvania both provide that a partner is not entitled to remuneration for services performed for the partnership, except reasonable compensation for services rendered in winding up. The full-time partner gets nothing for the work unless the agreement says otherwise.

Control

• Management structure. Member-managed or manager-managed, and who the managers are. In Pennsylvania this must be done deliberately: under 15 Pa.C.S. Section 8847(a), an LLC is manager-managed only if the operating agreement expressly provides for it.
• Voting weight and thresholds. Per capita, by percentage, or by class. Then set the threshold for each category of decision rather than accepting the statutory split between ordinary course and everything else.
• Reserved matters. The specific decisions that require a supermajority or unanimity: taking on debt above a threshold, selling assets, admitting owners, changing the business line, signing a lease, hiring family.
• Signing authority. Who can bind the company, up to what dollar amount, and what requires a second signature. In Maryland, pair this with the limiting statement in the articles of organization if you want it to reach third parties.
• Deadlock resolution. Mediation, a casting vote, a rotating tiebreaker, a neutral third director, a buy-sell trigger, or a shotgun clause. Pick one before you need it.

Change and exit

• Transfer restrictions. Rights of first refusal, tag-along and drag-along rights, and a flat prohibition on transfers to competitors, creditors, or ex-spouses.
• Admission of new owners. In a Maryland general partnership, Section 9A-401(i) provides that a person may become a partner only with the consent of all partners. Decide whether that is what you want.
• Withdrawal. Maryland’s LLC default under Section 4A-605(a) lets a member withdraw on not less than six months’ prior written notice, and Section 4A-605(b) lets the operating agreement prohibit withdrawal or limit it. Six months is an eternity inside a business relationship that has already failed.
• Buyout terms and valuation. The mechanism, the price, and how the price is paid. This is where a buy-sell agreement either lives inside the operating agreement or sits alongside it, covering death, disability, divorce, retirement, and involuntary departure.
• Removal for cause. The grounds and the process. Our guide to removing a business partner or LLC member in Maryland covers what this looks like when the agreement is silent.
• Term and continuation. An at-will partnership dissolves on one partner’s notice of withdrawal in both states, under Section 9A-801(1) and Section 8481(a)(1). Both states allow the agreement to change that. If you want the business to survive a departure, say so.
• Dissolution. The agreed triggers and the wind-up mechanics, coordinated with our guide to closing a business in Maryland.

Protection

• Confidentiality and intellectual property assignment. Whatever the owners create for the business should belong to the business, in writing, from day one.
• Restrictive covenants. Non-competition and non-solicitation provisions among owners, drafted to the enforceability standard that actually applies. See our guide to non-compete enforceability in Maryland, and note that the rules for owners in a sale-of-business context differ from the rules for employees.
• Books, records, and information rights. Both states protect access, and both limit how far you can restrict it.
• Dispute resolution. Forum, governing law, mediation or arbitration, and fee-shifting. Fee-shifting clauses are enforced, and they cut in whichever direction the outcome goes.
• Amendment procedure. Covered separately below, because Maryland is changing on this point.

Freedom of contract in this area is broad but not unlimited. Both states publish an express list of things the agreement may not do, and drafting past those limits produces a provision a court will decline to enforce, usually at the worst possible moment.

Maryland general partnerships

Section 9A-103(a) establishes the rule: relations among the partners and between the partners and the partnership are governed by the partnership agreement, and Title 9A governs to the extent the agreement does not provide otherwise. Section 9A-103(b) then lists ten exceptions. The partnership agreement may not:

• Vary the rights and duties under Section 9A-105, except to eliminate the duty to provide copies of statements to all partners
• Unreasonably restrict the right of access to books and records under Section 9A-403(b)
• Eliminate the duty of loyalty under Section 9A-404(b) or Section 9A-603(b)(3), although it may identify specific types or categories of activities that do not violate the duty, and may allow all partners or a specified number or percentage of not less than a majority of disinterested partners to authorize or ratify a specific act after full disclosure of all material facts
• Unreasonably reduce the duty of care under Section 9A-404(c) or Section 9A-603(b)(3)
• Eliminate the obligation of good faith and fair dealing under Section 9A-404(d), although it may prescribe standards for measuring performance if those standards are not manifestly unreasonable
• Vary the power to dissociate under Section 9A-602(a), except to require that the notice under Section 9A-601(1) be in writing
• Vary the right of a court to expel a partner in the events specified in Section 9A-601(5)
• Vary the requirement to wind up in the cases specified in Section 9A-801(4), (5), or (6)
• Vary the law applicable to a limited liability partnership under Section 9A-106
• Restrict rights of third parties under Title 9A

Two details in that list are worth pausing on. First, the loyalty carve-out has a lock on it: Maryland provides that the agreement may not be amended to expand or add categories of permitted activities without the consent of all partners after full disclosure of all material facts. Second, because the wind-up restriction reaches only Section 9A-801(4), (5), and (6), the at-will dissolution trigger in Section 9A-801(1) is fair game for the agreement.

Pennsylvania general partnerships and LLCs

Pennsylvania organizes the same idea differently and in more detail. 15 Pa.C.S. Section 8415 governs partnership agreements and Section 8815 governs operating agreements. Each provides in subsection (a) that the agreement governs the relations among owners, the rights and duties of owners and managers, the conduct of the business, the means and conditions for amending the agreement, and the means and conditions for approving entity transactions. Each then sets out a list of limitations in subsection (c) covering, among other things:

• Eliminating the duty of loyalty or the duty of care, except as permitted in subsection (d)
• Varying the contractual obligation of good faith and fair dealing, except as permitted in subsection (d)
• Restricting the duties and rights to information, except as permitted in subsection (d)
• Providing indemnification or exoneration beyond the statutory limits
• Varying specified causes of dissolution and specified wind-up requirements
• Unreasonably restricting a member’s or partner’s right to bring an action
• Varying provisions governing registered offices and Department of State filings
• Restricting the rights of persons who are not owners, subject to a narrow exception

Pennsylvania’s manifestly unreasonable standard

This is where the two states genuinely part company, and it is the most useful drafting distinction in this article.

Sections 8415(d)(3) and 8815(d)(3) permit the agreement, if not manifestly unreasonable, to alter specified aspects of the duty of loyalty, prescribe the standards for measuring good faith and fair dealing, identify categories of activities that do not violate the duty of loyalty, and alter the duty of care. Section 8815(d)(3)(v) goes further for LLCs and permits the agreement to alter or eliminate any other fiduciary duty.

Sections 8415(e) and 8815(e) then supply the judicial framework. The court decides as a matter of law whether a term is manifestly unreasonable. It must judge the term as of the time the term became part of the agreement, considering only the circumstances existing then, and it may invalidate the term only if, in light of the purposes and activities of the business, it is readily apparent that the objective of the term is unreasonable, or that the term is an unreasonable means of achieving its objective.

For a Pennsylvania business, this is a meaningful planning tool. It means fiduciary duties can be tailored with real precision, and it means the tailoring will be assessed against the world as it looked on the day you signed rather than the world as it looks on the day someone sues. It also means the drafting record matters: a term that looks harsh in hindsight is defensible if it made sense at inception, and a contemporaneous record of why it made sense is worth building at the time.

Maryland has no directly comparable statutory framework for LLC fiduciary duties. Instead, Title 4A declares in Section 4A-102(a) a policy of giving maximum effect to the principles of freedom of contract and to the enforceability of operating agreements, and the courts supply the duties.

Fiduciary duties depend on the entity, the owner’s management role, the governing law, and the agreement. Maryland recognizes common-law fiduciary duties for managing LLC members. In Pennsylvania, a member of a manager-managed LLC has no duty to the company or another member solely by reason of being or acting as a member, subject to the contractual obligation of good faith and fair dealing and any duties arising from another role.

Maryland

In Plank v. Cherneski, 469 Md. 548, 231 A.3d 436 (2020), Maryland’s highest court held that managing members of an LLC owe common-law fiduciary duties to the LLC and to the other members, based on agency principles. The court held that a breach of fiduciary duty may be actionable as an independent cause of action, but it expressly rejected the idea that Maryland recognizes a single universal or omnibus tort for every fiduciary breach. A plaintiff must identify the fiduciary relationship, the breach, and resulting harm; the available remedy depends on the nature of the relationship and the remedies historically available under statute, common law, or contract.

The case is worth reading for what happened as well as what was held. The minority members lost on the merits, and the trial court’s award of the majority member’s attorneys’ fees under a fee-shifting clause in the operating agreement was upheld. That is a useful reminder that the fee provision in your agreement is not boilerplate.

For Maryland general partnerships, the duties are codified: Section 9A-404 sets out the duties of loyalty and care and the obligation of good faith and fair dealing, and Section 9A-103(b)(3) through (5) limits how far the agreement may go in adjusting them.

Pennsylvania

Pennsylvania codifies the standards by management structure. Section 8849.1 governs members of a member-managed LLC and also states that a member of a manager-managed LLC has no duty to the company or another member solely by reason of being or acting as a member. Section 8849.2 governs managers of a manager-managed LLC. Section 8447 governs general partners. Those provisions interact with the limitation and permission structure in Sections 8815 and 8415 described above.

The drafting consequence is concrete. In a Pennsylvania LLC, the operating agreement can alter aspects of the duty of loyalty, alter the duty of care, and alter or eliminate other fiduciary duties, subject to the manifestly unreasonable limit and the statutory floor. In a Maryland LLC, you are drafting against a common law duty framework and a statutory policy of maximum effect to freedom of contract, without an equivalent statutory roadmap for how far the agreement may go. The same paragraph does not do the same work in both states, and an agreement copied across the state line is unlikely to land where its drafter intended.

On April 28, 2026, the Governor signed Senate Bill 631 and its cross-filed companion House Bill 996, enacted as Chapter 314 and Chapter 313 of the Laws of Maryland 2026. The legislation takes effect October 1, 2026. It covers several unrelated areas of the Corporations and Associations Article, including a new rejection-notice process for charter documents filed with SDAT, and it makes two changes that bear directly on partnership agreements. We tracked this legislation while it was pending in our post on Maryland’s Corporations and Associations revisions.

General partnerships: amendment scope moves into the agreement

Chapter 314 amends Section 9A-103(a) so that the partnership agreement governs not only the relations among the partners and between the partners and the partnership, but also the means and conditions for amending the partnership agreement.

This confirms in the text of the statute what careful drafters have long structured around: the unanimity requirement for amendments in Section 9A-401(j) is a default, and the partners may set their own amendment procedure. If your Maryland partnership agreement is silent on amendments, unanimity still governs. The amendment does not change the outcome for a silent agreement. It clarifies the authority to write a different one.

Limited partnerships: a new set of rules at Section 10-302

Chapter 314 adds five new subsections to Section 10-302, all effective October 1, 2026:

• A limited partnership is bound by and may enforce the partnership agreement whether or not the limited partnership has itself manifested assent to the agreement
• A person that becomes a partner is deemed to assent to the partnership agreement
• Two or more persons intending to become the initial partners may make an agreement providing that, on formation of the limited partnership, the agreement will be the partnership agreement
• Unless otherwise provided in the partnership agreement, the affirmative vote or consent of all the partners is required to amend the partnership agreement
• A partnership agreement may specify that an amendment requires the approval of a person who is not a party to the agreement, or the satisfaction of a condition, and an amendment adopted without that approval or without satisfying that condition is ineffective

That last provision is the one with teeth. It gives a lender, an investor, a preferred class, or a family trust a consent right over amendments that is enforceable at the statutory level, with a stated consequence for non-compliance. Maryland’s LLC Act already contemplates the same mechanic for operating agreements at Section 4A-402(a)(6), which permits the agreement to require that an amendment be approved by a person who is not a party or a member, or on the satisfaction of other conditions specified in the agreement.

This is the root error, and every other mistake grows from it. The absence of a written document does not create a blank slate. Oral or implied terms may still govern, and statutory defaults fill the matters the owners did not address. Owners who have not reduced their arrangement to writing therefore leave both the content and proof of their agreement uncertain.

In a Pennsylvania LLC it does not, unless the agreement says so. Section 8844(a) pays every pre-dissolution distribution in equal shares among members and persons dissociated as members. A member holding ninety percent and a member holding ten percent split distributions evenly by default. The fix is a single pro rata clause, and its absence is the most expensive omission in Pennsylvania LLC drafting.

In a Maryland LLC, Section 4A-503 allocates profits and losses in proportion to capital contribution values, and Section 4A-403(b)(1) ties voting to the profits interests determined under Section 4A-503. If one member contributed equipment, a customer list, software, or a year of unpaid labor, and nobody assigned a value to it in the company’s records, then both that member’s economics and their vote rest on a number that will be litigated rather than looked up.

Equal ownership feels fair at the start and can function as mutual veto power at the end. In a general partnership in either state, and in a Pennsylvania member-managed LLC, ordinary-course differences are decided by a majority and acts outside the ordinary course require unanimity. Pennsylvania manager-managed LLCs instead place ordinary-course decisions with the manager or managers, while reserving acts outside the ordinary course and operating-agreement amendments to all members by default. Maryland LLCs use different defaults: decisions concerning company affairs generally require a majority of the interests in profits, specified fundamental transactions require at least two-thirds, and the actions listed in Section 4A-403(d)(2) require unanimity. Amendment rules also depend on the entity and the agreement; in a Maryland LLC, unanimity is only the fallback when the operating agreement supplies no different amendment method.

The statute is unambiguous in both states: no remuneration for services performed for the partnership, except reasonable compensation for winding up. In Maryland, the working and inactive partners also share profits equally by default. In Pennsylvania, the current statute instead provides for equal pre-dissolution distributions. Either structure can leave the working partner uncompensated unless the agreement addresses compensation directly.

In a partnership at will, one partner’s notice of withdrawal dissolves the partnership under Section 9A-801(1) in Maryland and Section 8481(a)(1) in Pennsylvania. A partnership at will is any partnership where the partners have not agreed to remain partners for a definite term or until a particular undertaking is completed, which describes most handshake businesses. A profitable company can be forced into wind-up by one person’s bad month.

Agreements go stale. Ownership changes, capital changes, valuations change, and the law changes. Pennsylvania rewrote its partnership and LLC statutes wholesale in 2016 and applied the new rules to every existing entity as of April 1, 2017. Maryland is changing its partnership amendment rules effective October 1, 2026. An agreement drafted against a repealed statute is not automatically wrong, but it has not been checked.

The agreement is a private document. It is not filed, and it does not satisfy anything the state requires of you. In Maryland, entities must stay in good standing with SDAT, and our guide to SDAT forfeiture and reinstatement covers what happens when they do not. In Pennsylvania, Act 122 of 2022 replaced the old decennial report with an annual report requirement beginning in calendar year 2025, filed with the Pennsylvania Department of State. LLCs file by September 30 each year, and limited partnerships, limited liability partnerships, business trusts, and professional associations file by December 31. General partnerships that are not LLPs are not required to file. The Department has stated that it will not impose dissolution, termination, or cancellation for failure to file the reports due in 2025 and 2026, with those consequences beginning for reports due in 2027.

A partnership agreement is a living document. Review it when any of the following happens:

• An owner joins or leaves. The percentages move, the voting math moves, and the buyout terms should reflect the new structure.
• Capital structure changes. New money, a new class of interest, or a lender requiring consent rights.
• The business value moves materially. Fixed values and formulas that made sense at formation stop making sense as the company grows.
• You expand across the state line. A Maryland business opening in Pennsylvania, or the reverse, is now dealing with two sets of defaults and two compliance regimes.
• The law changes. Maryland’s amendment provisions take effect October 1, 2026. Pennsylvania annual reports and filing fees were required beginning in 2025, but the Department has deferred administrative dissolution, termination, or cancellation for nonfiling until reports due in 2027.
• An owner’s personal circumstances change. Marriage, divorce, disability, a new venture, or a creditor problem can each reach the business through that owner’s interest.
• You have a near-miss. A conflict that resolved itself almost always exposed a gap. Fix it while everyone is still relieved rather than waiting for the version that does not resolve itself.

As a general practice, agreements should be reviewed every three to five years, and any stated values updated annually. For businesses with an ongoing general counsel relationship, that review folds naturally into the annual governance cycle.

No. Neither Maryland nor Pennsylvania generally requires a general-partnership agreement to be written or filed. A partnership can arise when two or more persons carry on as co-owners a business for profit, whether or not they intend to form one, subject to the statutory exclusions for entities formed under other laws. The partners may have a written, oral, or implied partnership agreement. To the extent their agreement does not address a matter, the applicable statute supplies the default rule. Merely working with another person does not by itself create a partnership; the relationship must satisfy the statutory co-ownership-for-profit test.

They do the same job for different entities. A partnership agreement governs a general partnership. An operating agreement governs a limited liability company. A shareholders’ agreement does the equivalent work for a corporation. Business owners commonly say partnership agreement to mean any agreement among co-owners, and that is fine in conversation, but the entity determines which statute supplies the default rules when your document is silent. A multi-owner LLC in Maryland needs an operating agreement under Title 4A, not a partnership agreement under Title 9A, and the defaults in those two titles are materially different.

It depends entirely on your state and your entity, which is exactly why this default catches owners by surprise. In a Maryland general partnership, each partner is entitled to an equal share of the profits under Section 9A-401(b), regardless of who contributed more capital. In a Pennsylvania general partnership, distributions before dissolution are in equal shares under 15 Pa.C.S. Section 8445(a). In a Pennsylvania LLC, distributions before dissolution are also in equal shares among members under 15 Pa.C.S. Section 8844(a). But in a Maryland LLC, Section 4A-503 allocates profits and losses in proportion to each member’s capital contribution values, and distributions follow the right to share in profits. So two people who contribute unequal capital to an LLC can face a per capita default in Pennsylvania and a pro rata default in Maryland on identical facts.

Often yes, and this is one of the sharpest differences between the two states. In a Maryland general partnership, each partner is an agent of the partnership under Section 9A-301, and Pennsylvania is the same under 15 Pa.C.S. Section 8431(1). For LLCs, the states diverge. Under Md. Code, Corporations and Associations, Section 4A-401(a)(1), each member of a Maryland LLC is an agent of the company for the purpose of its business unless the articles of organization limit that authority or the operating agreement provides otherwise. Under 15 Pa.C.S. Section 8831, a member of a Pennsylvania LLC is not an agent of the company solely by reason of being a member. Same two owners, same handshake, different exposure depending on the state.

In a general partnership, generally yes. Under Md. Code, Corporations and Associations, Section 9A-306(a), all partners are liable jointly and severally for all obligations of the partnership unless otherwise agreed by the claimant or provided by law. Pennsylvania applies the same rule under 15 Pa.C.S. Section 8436(a). Joint and several liability means a creditor can pursue you personally for the entire obligation, not just your ownership share. Registering as a limited liability partnership changes this, as does operating through an LLC. No partnership agreement can strip a third party of that claim, because the agreement binds the owners to each other, not the outside world. It can, however, allocate the loss among the owners through indemnification and contribution provisions.

In a general partnership, no. Md. Code, Corporations and Associations, Section 9A-401(h) provides that a partner is not entitled to remuneration for services performed for the partnership, except for reasonable compensation for services rendered in winding up the business. Pennsylvania has the same no-remuneration rule at 15 Pa.C.S. Section 8441(i). This is the sweat-equity trap. If one partner works full time and the other contributes money but does not work, the working partner has no statutory right to a salary. Maryland also allocates partnership profits equally by default; Pennsylvania instead provides for equal pre-dissolution distributions. Compensation must be negotiated into the agreement.

In a general partnership at will with no written agreement, often yes. Under Md. Code, Corporations and Associations, Section 9A-801(1), a partnership at will is dissolved when the partnership has notice from a partner of that partner’s express will to withdraw. Pennsylvania applies the same rule at 15 Pa.C.S. Section 8481(a)(1). A partnership at will is simply a partnership where the partners have not agreed to remain partners for a definite term or until a particular undertaking is complete. Both states allow a partnership agreement to change this outcome, which is why term provisions, buyout provisions, and continuation provisions matter so much.

Both states impose limits. In Maryland, Section 9A-103(b) lists ten items a partnership agreement may not do, including eliminating the duty of loyalty, unreasonably reducing the duty of care, eliminating the obligation of good faith and fair dealing, unreasonably restricting access to books and records, varying a court’s right to expel a partner in specified circumstances, and restricting the rights of third parties. Pennsylvania’s list for general partnerships appears at 15 Pa.C.S. Section 8415(c) and its LLC list at Section 8815(c). Pennsylvania then adds a framework Maryland does not have: under Sections 8415(d)(3) and 8815(d)(3), the agreement may alter fiduciary duties if the terms are not manifestly unreasonable, and Sections 8415(e) and 8815(e) direct the court to decide manifest unreasonableness as a matter of law, judged as of the time the term entered the agreement.

Chapter 314 (Senate Bill 631) and Chapter 313 (House Bill 996), signed April 28, 2026 and effective October 1, 2026, amend Md. Code, Corporations and Associations, Section 9A-103(a) so that the means and conditions for amending the partnership agreement are governed by the partnership agreement itself. The same legislation adds new provisions to Section 10-302 for limited partnerships: the limited partnership is bound by and may enforce the partnership agreement whether or not it has itself manifested assent, a person who becomes a partner is deemed to assent to the agreement, persons intending to become initial partners may adopt a preformation agreement that becomes the partnership agreement on formation, unanimous consent is required to amend unless the agreement provides otherwise, and an agreement may condition amendments on the approval of a non-party or the satisfaction of a condition, with non-complying amendments rendered ineffective. Pennsylvania has had comparable amendment-scope language since Act 170 of 2016.

Rarely, and the reason is structural rather than snobbery. A national template cannot know whether your default distribution rule is per capita or pro rata by capital contribution, because that answer flips between Maryland and Pennsylvania and between LLCs and partnerships. It cannot know whether your co-owner is automatically your agent, because Maryland and Pennsylvania answer that oppositely for LLCs. It cannot know which provisions are non-waivable in your state. A template that overrides a default your state does not have, and stays silent on the one it does, leaves you with the statute you were trying to avoid.