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Partnership Agreements - How to make it plain sailing

View profile for Joseph Hossein
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A partnership exists when two or more people start a business together with a view to making a profit. There are 3 types of partnership in England and Wales; a conventional partnership, a limited partnership and a limited liability partnership.

A written partnership agreement is not required to form a partnership. Not having one however can lead to uncertainty between the partners as to their respective responsibilities, liabilities and powers. A partnership agreement drafted by an experienced solicitor can be an invaluable investment, both in the short and long term. Below is a list of some of the things to think about when it comes to partnership agreements:

1.   Duration. Is the partnership to be an ongoing venture or is it to continue for a fixed term only?

2.   Capital contributions. How much capital will each partner contribute to start the business? Can partners be required to inject further capital in the future?

3.   Partnership assets. Are the partnerships’ assets to be owned by the partners equally or in the proportions in which they have invested capital?

4.   Profits. How much profit will each partner receive? Are they to share equally in the profits or in the proportions in which they have invested capital?

5.   Losses. How are losses to be borne by the partners? Equally or in the proportions in which they have invested capital?

6.   Holidays. How many days leave is each partner entitled to each year?

7.   Decision making. Which decisions must be made by a majority of consenting partners and which must be made with the unanimous agreement of all partners? Can any decisions be made by a single partner without the agreement of the others?

8.   Ownership. If a partner wants to sell their stake in the partnership, is there to be a right of first refusal in favour of the other partners? How is their stake to be valued? What is the partnership’s position on taking on new partners?

9.   Restrictions. Are there to be any restrictions on the partners during the term of the partnership and thereafter? eg a restriction on competing with the partnership and a restriction on disclosing confidential information.

10.  Dispute Resolution. How are disputes between the partners to be handled? Mediation, arbitration or court proceedings?

11.   Contingencies. If a partner becomes ill and can’t contribute like they used to, are their profits to be reduced? How can the partnership agreement be modified? How can the partnership be dissolved? Can a partner be expelled? What is to happen if a partner dies/retires/becomes bankrupt?


Should you need expert legal advice regarding any of the above or indeed any other property law matter, please contact Joseph Seyed Hossein at or telephone 01204 540 900.

The contents of this article are for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.