GbR contract: Essential information + PDF template

Intro: What is a GbR contract?

A GbR contract is the partnership agreement for a GbR. In principle, a GbR can be formed informally (learn more about trade registration of its partners here), even with a simple handshake (§§ 705–740 BGB). However, a written GbR contract is required in certain cases—for example, if a partner contributes real estate or property to the partnership.

Even when not legally required, putting a GbR agreement in writing is strongly recommended. A clear contract helps prevent disputes and provides guidance in situations such as conflicts, legal action or insolvency. It defines each partner’s rights, duties and responsibilities, both internally and externally, and sets out essential rules for how the GbR is managed and how important future decisions are to be handled.

9 questions: How to structure a GbR contract

While the German Civil Code (BGB) outlines the basic structure of a GbR contract (§ 705 BGB ff), many essential organisational details are left undefined—for example, rules for partner meetings, decision-making procedures or precise compensation arrangements. This makes a well-drafted contract crucial.

To structure your GbR clearly and avoid disputes later, your agreement should answer the following
nine core questions as precisely as possible:

1. What is the objective of your GbR?
2. How much will partners contribute?
3. How will profits and losses be distributed?
4. How will management be organised?
5. How will partners’ meetings be structured?
   • Will there be a formal partners’ meeting?
   • How often will it take place?
   • Who may or must issue the invitation?
   • How must invitations be delivered (format, notice period, agenda)?
6. How will decisions be made?
   • Which decisions require a simple majority, a two-thirds majority or unanimity?
   • Will votes be weighted according to contribution shares?
   • How are partner absences handled?
7. How will withdrawals and compensation be handled?
   • May partners privately withdraw funds? If so, how much?
   • Can compensation change depending on business performance?
   • Will partners continue receiving compensation if they fall ill?
   • Will the GbR create reserves for difficult times?
8. May partners transfer their shares?
   • If yes, under what conditions and with whose approval?
9. Under which conditions can partners leave or the GbR be dissolved?
   • May partners terminate the contract? What notice period applies?
   • What circumstances lead to dissolution?

The following guidance offers practical tips and possible solutions to help you answer these questions
and manage your GbR successfully. Legal excerpts are included where helpful to provide additional context.

What is your GbR’s objective?

Defining the company objective or business purpose of your GbR is one of the most important parts of the contract. The law provides only limited guidance, but it does state that all partners must actively support the GbR’s purpose and avoid anything that might hinder it. This means the objective must be shared and agreed by all partners, not shaped by personal ambitions.

Example: Imagine you and your cofounders want to open a flower shop. You draft the purpose as: “The purpose of the GbR is the purchase and sale of all types of plants in a shop, especially flowers for every occasion.”

Although precise, this description may limit future business development. If you later decide to offer plant rentals with maintenance services for offices, you would need to amend the contract.

Tip: During your business planning, make sure all partners share the same understanding of the GbR’s purpose. Discuss different expectations openly and watch for hidden motives. Full agreement on the objective helps prevent conflicts later and ensures the GbR can grow in the direction you envision.

 

How much do the partners contribute?

By default, the law assumes that all partners contribute equally. In reality, a GbR rarely works this way. Unlike corporations, a GbR does not require a fixed capital contribution. Instead, partners typically contribute expertise, contacts, equipment, contracts, or other assets.

In practice, the value of these contributions often differs significantly. This is why you should clearly document each partner’s contribution in the GbR contract. For example:

• one partner may not work full time,
• another may provide valuable materials or equipment,
• a third may contribute an established client list.

Because these contributions vary, the contract should define their relative value. This creates a transparent basis for determining each partner’s share in the GbR’s assets and prevents disputes later.

How are the GbR’s profits and losses distributed?

By default, the law states that all partners share profits and losses equally, unless the GbR contract specifies another arrangement. If partners contribute different values or types of services, the contract should reflect this by defining an appropriate distribution key.

However, even a customised distribution clause does not protect you from potential additional contribution obligations. If one partner cannot cover their portion of a loss during insolvency, the remaining partners must step in. Unlike a GmbH, a GbR offers no limited liability—each partner is personally and fully liable with private assets.

 

How is the GbR’s management organised?

Under section 709 BGB, the GbR is managed jointly by all partners, meaning every decision requires unanimous approval. In practice, this is often impractical: each partner would have the right to veto even everyday transactions.

To ensure smooth operations, you may assign management powers to one or several partners in the GbR contract. Partners without management authority are then excluded from day-to-day decisions.

A common approach is to grant managing partners autonomy for typical daily business activities. For example:

• Independent decisions up to a defined amount: Any managing partner may make financial decisions up to an agreed limit (e.g. €500 to €5,000). This allows purchases such as supplies or office equipment without needing partner approval.
• Approval required above this limit: For transactions exceeding the threshold, partner consent is needed. The contract must define whether a simple majority or unanimous decision is required.

In cases of a gross breach of duty or inability to manage the business, section 712 BGB allows the other partners to remove a managing partner. How this decision is made — majority vote or unanimity — must be defined in the contract.

A managing partner may also resign voluntarily, but must ensure a proper transition, avoid unnecessary damages to the GbR, and maintain orderly business operations until a replacement is established.

Partners’ meeting

The term ‘GbR partners’ meeting’ does not appear in the law. The legal requirement is simply that certain decisions must be made by either a majority vote or unanimous approval. With two or three active partners, this is usually easy enough to handle informally.

However, if your GbR has several partners—especially if some are not involved in day-to-day operations— holding a formal partners’ meeting becomes essential. It provides structure, ensures transparency and keeps all partners informed. Every partner, including those without management authority, has the legal right to inspect the GbR’s accounts and documents. This follows from section 716 BGB, which grants each partner full access to information about the partnership’s affairs.

Common disputes

• Appointing or removing a managing partner
• Allocating profits or adding funds to reserves
• Dismissing or suspending a partner
• Amending the GbR contract
• Resolving objections between managing partners

To prevent conflict, your GbR contract should establish a clear procedure for partners’ meetings, including structure, responsibilities and voting rules. Below are the points you should define.

How often should the partners’ meeting take place?

A yearly meeting at the end of the financial year is recommended. Extra meetings should be called if a partner requests an inspection, raises objections to a legal transaction, or if any of the disputes listed above occurs.

Who should send the invitation?

Typically, the managing partner issues the invitation. However, your GbR contract may allow any partner to request a meeting—for example, when more than half of the partners submit a written request.

How should invitations be sent?

To allow all partners to exercise their rights, invitations should be sent two to four weeks in advance and include an agenda plus any documents required for decision-making. Your contract should specify the form — usually written notice delivered by mail or in person.

How are decisions made?

Your GbR contract can determine the voting rules with almost complete freedom. Possible models include:

• Unanimous vote
• Two-thirds majority
• Simple majority
• Weighted vote based on profit/loss shares

Experts recommend unanimous votes for all personnel decisions, except cases where a partner is to be dismissed. The partner facing dismissal keeps a right to vote, but will naturally not approve their own removal.

When is unanimity required?

Unanimity or a two-thirds majority should apply to:

• Amendments to the GbR contract
• Changes to the GbR’s stated purpose

Routine operational decisions, however, should be made by simple majority to enable smooth daily operations.

How should absences be handled?

If a partner cannot attend, they cannot vote—unless the GbR contract allows:

• A written vote submitted in advance, or
• Transferring their voting right to another partner

In all cases, management must ensure timely and complete notification of every meeting.

Written circulation procedure

A written decision-making process (e.g., by email) is recommended for urgent matters that cannot wait for a formal meeting. This allows quick, legally valid resolutions.

Tip: While GbRs may reach decisions verbally, written records reduce the risk of disputes—especially in larger groups with differing interests. Always prepare written minutes and distribute them to all partners. Set a deadline for objections; after that, the minutes are considered approved and management may proceed.

May GbR partners withdraw wages?

No. The law does not provide for wages for GbR partners. However, a GbR may pay managing partners a management salary if the amount is appropriate for the industry and reflects real managerial work. These payments count as operating expenses and reduce the GbR’s profit. All partners are otherwise compensated through their profit shares, which are usually distributed only after the financial year has closed.

You can, however, use private withdrawals for profit-share payments made during or before the end of the year. This allows you to define salary-like compensation in your GbR contract and specify how partners may receive these withdrawals in advance.

How much may a partner privately withdraw?

GbR partners may freely agree on the amount of private withdrawals. However, your GbR contract should include rules that ensure the partnership always remains financially liquid. A practical solution is to prepare monthly accounts and allow partners to withdraw, for example, up to 50% of their profit share. All withdrawals must be documented and recorded in a private account, which is a sub account of each partner’s equity.

Private withdrawals also include the private use of business equipment and the private consumption of goods. Cash withdrawals or transfers of profit shares are not subject to VAT, but VAT must be applied to private use of business assets and privately consumed self-produced goods.

May private withdrawal amounts be adjusted?

Yes. With the consent of all partners, the allowed withdrawal amount can be changed at any time. Reducing withdrawals is advisable whenever the GbR’s liquidity is at risk.

Will partners continue to be compensated if they fall ill?

Profit-share withdrawals cannot be withheld when a partner becomes ill. However, if a managing partner receives a management salary, normal sick-pay rules apply. You can include additional provisions in the GbR contract for long-term incapacity. For example, if a partner is unable to contribute for more than three months, you may agree that their profit share is reduced proportionally.

Will the GbR maintain reserves for turbulent times?

Yes—this is strongly recommended. Reserves consist of profits that are not withdrawn and should be high enough to cover all liabilities and ensure the GbR can meet its payment obligations even in slow business periods.

May partners transfer their shares to third parties?

No. According to Section 717 BGB, partnership rights and obligations cannot be transferred. Partners cannot sell their GbR shares. If someone wishes to leave the partnership, they must do so through proper termination.

May a partner terminate a GbR contract?

Yes. Termination is permitted (§§ 723–725 BGB), which set out the minimum legal requirements. These rules are designed to protect the partnership and ensure its continuation even if one partner leaves.

The law also refers to termination for “compelling reasons” and restrictions on premature termination. What counts as a compelling reason? And when is a termination considered premature? These questions must be carefully clarified in the GbR contract to prevent disputes.

What counts as a ‘premature’ retirement from a GbR?

There is no strict legal definition of ‘premature’, but the principle is clear: a partner must not resign in a way that endangers the GbR’s purpose or causes avoidable damage. Because a GbR is built on mutual trust, leaving on short notice during an active project or critical phase is considered a premature termination.

Tip: To avoid this, include a notice period in the GbR contract (e.g. six months before the financial year ends).This gives the remaining partners time to prepare—especially since they must repay the departing partner’s capital share and profit claims, which may require securing liquidity.

What is a ‘compelling reason’ for termination?

A GbR founded for a specific purpose can only be dissolved early if another partner commits a serious breach of duty, either intentionally or through gross negligence.

Example – intentional breach: A partner is found embezzling sponsor money. This destroys trust and justifies immediate termination.

Example – gross negligence: A partner forgets to take out mandatory event insurance for an upcoming festival, exposing the GbR to major risk. This too allows early withdrawal.

In both cases, termination protects you from remaining in a partnership jeopardised by another partner’s harmful behaviour.

 

Dismissing a GbR partner

A partner can be dismissed if they seriously breach their obligations. This is permitted, with the key grounds for dismissal described in § 723 BGB. In cases involving intentional misconduct or criminal behaviour, you should also consider reporting the offence in addition to initiating the partner’s dismissal.

 

When should a GbR be dissolved?

There are three legal grounds for dissolving a GbR:

1. Dissolution due to fulfilment or impossibility of the GbR’s objective (§ 726 BGB)

A GbR must be dissolved once its agreed business objective has been achieved or can no longer be realistically fulfilled. If the partnership was founded for a limited purpose – for example, organising a single event or completing one project – the GbR ends once that purpose is reached. Likewise, if the objective becomes impossible due to legal, economic or operational barriers, dissolution is mandatory. In both cases, partners must initiate the formal winding-up process to settle all rights and obligations.

2. Dissolution due to the death of a partner (§ 727 BGB)

If a partner dies, the GbR is generally dissolved by law, unless a continuation clause has been included in the GbR contract. Without such a clause, the deceased partner’s legal successors must notify the remaining partners immediately. The remaining partners then calculate the deceased partner’s share value and repay it to the successors during the winding-up. To avoid external heirs stepping into partnership rights, most GbR contracts include provisions ensuring the transfer of shares to the remaining partners only.

3. Dissolution due to insolvency (§ 728 BGB)

A GbR must be dissolved if the partnership itself becomes insolvent and insolvency proceedings are opened. A court-appointed insolvency administrator usually takes over business operations. If, however, only one partner becomes insolvent, the GbR can still be dissolved, but continuation is possible if the remaining partners take over the insolvent partner’s responsibilities and buy out their partnership share. During the winding-up, the insolvent partner’s share must be removed from the partnership assets so that the GbR can continue to operate legally and financially sound.

 

Winding-up: continuation after termination or dissolution

A partner’s exit, dismissal or even the formal dissolution of a GbR does not automatically mean the partnership must stop operating. In most cases, the remaining partners want the GbR to continue. To make this possible, the partnership must carry out a formal winding-up process (Auseinandersetzung), as regulated in sections 730–740 BGB.

During winding-up, all assets, liabilities and partner accounts are calculated as of a defined date. Based on this calculation, partners either receive profit shares or must pay additional contributions. If the GbR will continue with fewer partners, winding-up mainly serves to determine what the departing partner is owed or must repay.

If the GbR is dissolved permanently, all pending transactions must be completed first. The law allows the GbR to continue operating for this purpose. At the same time, former partners lose their management rights and may no longer act on behalf of the GbR.

Once all debts are settled and transactions concluded, partners may reclaim their original capital contributions. Any remaining surplus is distributed proportionally, while any remaining losses must be covered jointly through subsequent contributions by all partners.