allocation
Definition
Allocation is the process of dividing up money, resources, costs, or responsibilities between parties according to a specific plan or agreement. In a business or legal context, it determines who gets what share of something, whether that's profits, losses, expenses, or assets.
Example
If you and two partners split a business, your partnership agreement might include an allocation that gives you 50% of profits and each partner 25%, regardless of how much work each person does.
Watch Out
Make sure any allocation agreement clearly spells out the exact percentages and the method used to calculate them, because vague language here is one of the most common sources of partner disputes.
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This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.