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Establishing a formal Partnership Agreement is pivotal to ensuring smooth and successful relationships between business partners of a general partnership.
If you are operating your business as a general partnership, in the absence of a formal Partnership Agreement, your business is governed by the general (and often outdated) provisions contained in the Partnership Act 1890 (the Act). In reality, some of the default provisions under the Act will not often coincide well with the nature and needs of your business.
For instance, if your business is governed by the Act without a Partnership Agreement, you are legally obliged to contribute (and to share) capital and profits equally between all partners. In addition, where no fixed term for the partnership has been agreed between the partners, any partner may terminate the partnership on giving notice under the Act.
Consequently, Partnership Agreements are an important way of establishing a set of rules specifically tailored to suit your particular business and override (or vary) the default provisions under the Act where required. Alongside the matters highlighted above, other key areas often covered by Partnership Agreements include:
Grounds for expulsion and disputes
Family members in partnerships together tend to have a laissez-faire attitude when it comes to written formal agreements. This is because they trust their family members and therefore do not see the necessity to put in writing the provisions governing the business and the nature of the partners’ relationships. However, given the above, and the unfortunate truth that family relations can breakdown, Partnership Agreements are important to try and minimise the potential for discord between partners.
Glanvilles can help you either draft or review a Partnership Agreement at any time in the life cycle of your business, whether it be an already-existing partnership or whether you are looking to begin one. We will work closely with you and your partners to ensure that the Partnership Agreement is structured in a manner best fitted to the needs of your specific business and covers all necessary areas.
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Glanvilles LLP is Lexcel accredited by the Law Society in recognition of the high standards of our practice management and client care. We are independently regulated by the Solicitors Regulation Authority (SRA).
If you would like our assistance, or have any further questions, please do not hesitate to contact the Commercial team at Glanvilles LLP.