Partnership Agreements

Partnership Agreements Key Facts

• A partnership is created whenever two or more people carry on a business for profit;
• Partners have unlimited liability for the debts of the partnership, appropriate and adequate insurance is therefore extremely important;
• There is no registration process when forming a partnership;
• Partnerships don’t have to publish their details or accounts; and
• A partnership is not a separate legal entity from its partners.

Do you need a written partnership agreement?

If there is no written agreement then the Partnership Act 1890 will govern the partnership. It is unlikely this old Act will be appropriate for a modern business.

Partnership agreement key clauses:

• Description of the partners old and new.
• The commencement date of the partnership. Most partnerships are “at will”. This means that they will last unless and until someone serves notice to dissolve it.
• The business of the partnership should be carefully described, and the procedure for modifying it.
• The partnership name.
• How income and capital are to be apportioned between the partners to reflect their levels of investment and involvement in the business.
• Description of what is partnership property and what is the personal property of the individual partners.
• The management structure and role of the partners in the business.
• How prolonged absence of the partners is dealt with, and when a partner may be expelled.
• Partners are not employees however many modern partnership agreements to have employee type rights to maternity and paternity leave rights to encourage a broader range of partners to invest in the business.
• Restrictions on partners.
• Death, retirement & admission of partners and the dissolution of the partnership.

Limited Liability Partnership (LLP) key facts:

• The LLP has its own legal personality, separate from that of its members (partners);
• An LLP is incorporated at Companies House, and its details and accounts published;
• The liability of the members of an LLP is limited.

For more details on how we can support you or your business, contact our Corporate and Commercial Law team today.

Your Partnership Agreements Team

Andrew Best

Senior Partner, Head of Corporate and Commercial

Jonathan Streets

Paralegal, Corporate and Commercial

Clair Marsden

Paralegal, Corporate and Commercial

Kingsley James

Solicitor, Corporate and Commercial

Sharnika Reid

Associate Solicitor Corporate and Commercial

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