Some clients refer to any agreement between owners as a “partnership” agreement. This is an error insofar as a true partnership agreement is only used in general partnerships (which is a terrible way to do business).
In fact, one reason general partnerships are a mistake is that they can be entered into without any kind of signed agreement. Having terms between business owners in writing is extremely important because written terms can help them each better understand what they will receive in exchange for their money and hard work before they commit to the deal. Not having written terms can result in unnecessary and costly litigation when owners later disagree about what their legally-binding oral agreement originally entailed.
Like the general partnership, a limited liability company also can have a legally-binding oral ownership (here, an “operating”) agreement though it is also strongly recommended that it be reduced to writing. Missing terms of an LLC operating agreement not orally agreed to by the members, however, can be “filled-in” using default provisions of the limited liability company statutues.
Unlike partnerships and LLCs, corporations require written bylaws to govern operations although agreements between the shareholders are usually optional.