Make an enquiry

    Enquiry Form









    Contact

      Enquiry Form






      Supporting Document


      We are welcoming clients back to our offices Find Out More
      FJG Solicitors in Essex, Colchester, Chelmsford, London – Fisher Jones Greenwood
      • 0845 543 5700
      • [email protected]
      • Make an enquiry
      • Online Payment
      • Home
      • Services
        • Services for you
          • Advocacy
          • Civil & Commercial Disputes
          • Clinical and Medical Negligence
          • Conveyancing
          • Employment Law
          • Family Law
          • Children Law
          • Immigration & Visas
          • Notary Services
          • Personal Injury
          • Wills, Life Planning & Probate
        • Services for business
          • Academies Portal
          • Agricultural and Rural
          • Business Immigration
          • Commercial Dispute Resolution
          • Commercial Litigation
          • Professional Negligence
          • Commercial Property
          • Construction Law
          • Planning Consultancy
          • Corporate and Commercial
          • Education Services
          • Employment Law
          • Healthcare Services
          • International Services
          • Landlord & Tenant Services
        • Services by sector
          • Agriculture & Estates
          • Care Homes
          • Charities & Social Enterprise
          • Construction
          • Education Law
          • Energy
          • Family Owned Business
          • Healthcare & Dentistry
      • Our people
      • About us
        • CSR
        • Awards
        • Our Vision
        • Accessibility
        • Careers
        • Work Experience
        • Equality & Diversity
        • FLOCC
        • FJG Foundation
        • SAFE Forum
      • News, Events & Insights
      • Blog
      • Podcasts
      • Contact us
        • Colchester
        • Chelmsford
        • Clacton-on-Sea
        • Billericay
        • Braintree
        • Frinton-on-Sea
        • Holland-on-Sea
        • London

      Partnership Agreements: why are they important?

      10 April 2019 by

      interlinked yellow blue and red plastic monkeys holding hands, Partnership Act 1890, limited liability partnership
      interlinked yellow blue and red plastic monkeys holding hands, Partnership Act 1890, limited liability partnership

      Are you are a partner in a partnership? Perhaps you’re thinking about getting involved in a partnership with somebody else? Either way, it’s very important to have a partnership agreement. If you already have one, it may be sensible to consider whether it should be updated; in order to ensure that it remains fully compliant and enforceable.

      This blog will only address the importance of a partnership agreement from a general partnership’s perspective; not from a limited liability partnership’s perspective (LLPs). Whilst it is open to you to have a partnership agreement with an LLP, the partners of an LLP have limited liability. They are therefore afforded greater protection than the partners in a general partnership.

      Partnerships are regulated by the Partnership Act 1890 (PA) which is the basis of today’s partnership law. The issue arising therefrom is that the PA does not cover all the ground required to be covered in setting up a partnership. Furthermore, as it came into force in 1890, some of its provisions are not appropriate for modern business life. It is therefore always advisable for partners to enter into a formal partnership agreement to regulate their operations and affairs.

      A partnership agreement can cover extensive provisions; most of which may be more beneficial than relying on PA or general law – the table below provides a comparison:

      Partnership Act 1890

      Partnership Agreement

      Duration

      • Fixed term with the partnership automatically dissolved at the expiration of the term; or
      • Indefinite term – partnership terminated at any time by notice given by any partner to the others
      In addition to the indefinite term, you may add other circumstances when the partnership may be brought to an end, for example- conduct, incapacity etc

      Capital / Profit & losses

      The capital contributed to the partnership by the partners does not determine the share of net assets or capital to which they are entitled- partners are entitled to share equally in the capital and profits of partnership and must contribute equally towards the losses.

      It is open to you to make provisions in the agreement as to the share that each partner is entitled to in the capital, profits, as well as contributions towards losses.

      Partners may therefore prefer to link their initial contributions to their share entitlement in the profits.

      Partnership Property

      A partnership is not a separate legal entity (unlike a company) and cannot hold assets in its own name. The property is therefore held in the name of individual partners as trustees for the partnership. To provide certainty, you may add provisions in the agreement in relation to the partners holding the property as tenants in common, terms of occupation etc.

      Accounts

      There is no specific provision for the partnership to prepare accounts. It is important to make an express provision in the agreement for a balance sheet as well as profit and loss account to be drawn up in respect of each accounting period.

      Relationship between the partners and outsiders

       

      • Partners may be jointly responsible for the contractual debts of the partnership.
      • The estate of the deceased partner has several liability for the debts of the firm to the extent that they are not otherwise satisfied.
      • Wrongful acts or omissions by a partner acting in the course of business may give rise to joint and several liability.
      It is open to you to make provision in the agreement in relation to the terms of the relationship between the partners as well as outsiders.

      Relationship between the partners

       

      Certain terms are implied in the partnership agreement, for example:

      • Entitlement to share capital;
      • Obligation on the partnership to indemnify every partner;
      • Entitlement to interest on advances to the partnership;
      • Requirement that every partner takes part in the management.

      These terms may be amended in a partnership agreement.

      It is open to you to make provision in the agreement in relation to the terms of the relationship between the partners.

       

      Admission of new partners

      New partner admissions require unanimous consent.

      You can amend the requirement for unanimous consent by making a provision stating otherwise in the partnership agreement.

       

      Other relevant provisions in a partnership agreement may also be for parental leave, retirement, and even death; as well as dissolution and winding up of the partnership.

      A partnership agreement is a time and cost-efficient way of dealing with issues. They also provide a finite procedure and position should any such issues arise.

      The Corporate Commercial Department here at FJG can assist you in drafting a partnership agreement, or advise you in relation to an existing partnership agreement; or otherwise advise you on your position at law generally.

      Should you require any further information or assistance please do not hesitate to get in touch – call 01206 700113 or email [email protected].

       

      Authors
      Archives
      Subscribe to RSS feed

      Recent Posts

      • Worth the wait
      • What is a section 37 report?
      • What is a section 7 report?
      @FJGSolicitors

      We've had a 5* review from Zoe: Moving home https://t.co/4lbJehtq0g

      19 hours

      RT @MistleyCC: How good did the new T20 kit look on Thursday?! 🔥 A massive thanks to @FJGSolicitors for sponsoring our kit this year! https…

      1 day

      We've had a 5* review from Nicholas: EXCELLENT ADVICE AND VERY EFFICIENT https://t.co/4lbJehtq0g

      2 days
      Billericay 01277 623132
      Braintree 01376 552828
      Chelmsford 01245 890110
      Colchester 01206 835300
      Clacton 01255 323103
      Frinton 01255 514100
      Holland-on-Sea 01255 818900
      London 08455 435700
      Sudbury 01787 373387
      • Disclaimer
      • Accessibility
      • Terms & Conditions
      • Privacy Policy
      • Cookies
      • Price & Service
      • Signup to our Newsletter
      • COVID-19 Risk Assessment

      Fisher Jones Greenwood is the trading name of Fisher Jones Greenwood LLP, a Limited Liability Partnership authorised and regulated by the Solicitors Regulation Authority and registered in England ( Number: OC305854 ). A list of members is available for inspection at the registered office at Charter Court, Newcomen Way, Colchester Business Park, Colchester, Essex CO4 9YA

      This website uses cookies & data collection

      Our website uses cookies, which are small text files that are placed on your computer by websites that you visit to distinguish you from other users. They are widely used in order to help website owners like us provide you with the best user experience possible. They also provide us with information that can help us improve our websites and marketing activities. By clicking an item or link on this website, you agree to the use of cookies and other data collection.

      Find out more

      We are welcoming clients back to our offices

      Differing tiers and three lockdowns later, Fisher Jones Greenwood Solicitors are now pleased to be able to welcome clients safely back to our offices.

      Remote working and the digitalisation of the way we work, have been key to keeping FJG and the rest of the country going.

      • We are now able to offer, pre-booked face-to-face appointments. Although, we are still able to offer remote appointments if preferred.
      • You can continue to visit our offices at any time to post any correspondence and documents through letterboxes.

      If you are visiting an FJG office, covid-19 safety rules of social distancing, hand sanitization, and the wearing of masks will still apply.

      • Please be aware you will also need to have your temperature taken on arrival.
      • There will also be protective screens in place to protect you and our staff.

      Please do not hesitate to contact your legal adviser by email or by telephone should you have any worries or concerns. Alternatively, please call our main switchboard number (01206 835300), and a message to return your call will be relayed to the relevant person.

      Best wishes
      Paula Cameron
      Managing Partner