Partnerships
Related Information
Partnership Agreements
Should I have a Partnership Agreement?
It is not a legal requirement to have written terms of agreement, but it is highly desirable to do so. Partnerships are defined and governed by the Partnership Act 1890, a longstanding piece of legislation that has remained largely unchanged since its introduction over a century ago.
Under the Act two people are in partnership if they are in business together ‘ with a view to profit ‘ (even if they do not actually make a profit). The Act contains a number of default provisions governing partnerships which apply in the absence of written terms. You may not wish a number of these to apply to your business. For example, if there is no fixed period to the partnership, it will be deemed a partnership ‘ at will ’, which can be brought to an immediate end by any one partner giving notice of dissolution at any time.
Written Partnership Agreements
A written agreement gives you the ability to override the Act by providing for notice periods when partners wish to retire from the partnership.
An agreement will also typically cover:
- arrangements for how the partnership will be managed;
- the benefits each partner is entitled to;
- the duties of partners;
- how and when the partnership accounts are drawn up and
- exit arrangements for outgoing partners.
Provision can also be included for how disputes are resolved without recourse to court proceedings.
We can advise you on the type of agreement which best suits your business, working with you to tailor the agreement to reflect the way the partnership works and to anticipate future issues which might arise.
For further information about partnership agreements please contact Susan Jennings on 01634 828277.
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