Blacks Solicitors’ Corporate team regularly support clients who need help with drafting and reviewing Partnership Agreements.
A Partnership Agreement sets out the terms of the shared ownership of an unincorporated business and provides legal protection for each partner should a dispute arise.
A Partnership Agreement should provide for:
- How profits and losses are to be shared between the partners
- The capital contributions required of each partner
- How profits are to be allocated if a partner is absent due to sickness, parental leave, or during holidays
- Each partner’s duties and responsibilities towards the business and the other partners
- Management of the partnership business
- The continuation of the business if a partner leaves
- What happens if a partner dies
- Partner expulsion
- Partner retirement
Frequently Asked Questions
Why do I need a Partnership Agreement?
If there is no Agreement in place, then partners have simply entered into a ‘partnership at will’ governed by elderly statutory provisions (principally the Partnership Act 1890) which unfortunately rarely suit any business.
The “default” position in the absence of an Agreement is that each partner will have an equal share of the capital and profits, and that any partner can trigger a dissolution of the partnership with immediate effect.
I am in a partnership with family members. Is it still necessary to have an Agreement?
Unfortunately even family members can still have different priorities, agendas, and disagreements. In the event of such a disagreement the potential consequences outlined above under the heading “Why do I need a Partnership Agreement” are just as relevant.
It is always a good idea to have a Partnership Agreement in place even if your fellow partners are family members or friends, as the consequences of not having one can have unintended consequences, and be very costly and damaging to the business in the event of a dispute.
For more information about Partnership Agreements, for a no obligation discussion, please contact our Corporate team today via email or call 0113 207 0000.