Why you need a Partnership Deed

A written agreement is not in fact necessary to form a partnership. Rather, if no written agreement is used, the Partnership Act 1890 will imply the terms of the partnership according to what was thought well over a century ago to be sensible as default provisions. It is self-evident that this is both impractical and potentially very dangerous, because the Partnership Act is extremely outdated and in any event could not possibly coincide with your wishes as to the specific business relationships you want to create.

For this reason it is essential that you have a Partnership Deed drawn up by a suitably experienced solicitor. The terms of this Deed will be comprehensive enough to override the ‘default’ provisions that would otherwise be implied by the Partnership Act.

Even the most basic Partnership Deed should provide for the following matters, which together constitute a basic ‘check list’ of matters to consider if you are starting business in partnership:

  • Who the partners are
  • The commencement date of the partnership
  • The nature of the partnership’s business and its name
  • The sharing of profits and losses
  • The investments to be made as the capital of the partnership
  • What is partnership property
  • The management of the partnership
  • The partners’ obligations to the firm
  • The resolution of partnership disputes
  • What happens upon dissolution of the partnership or upon the admission, death or retirement of any partner
  • Covenants from partners; including post-dissolution covenants.

When tailored to your specific needs, the Partnership Deed we draft for you will put into a legally binding format, the very essence of your new business structure and aspirations.

Likewise, having a properly drafted partnership deed from the outset will allow you to speedily and successfully adapt its provisions to cope with the growth and changes in your partnership for many years to come. Please click here for an explanation of why it is essential to keep the terms of your Partnership Deed under review as the years go by.