A good business partnership, like marriage, is built on trust and commitment. A partnership agreement is written to reflect and maintain that mutual trust and commitment between partners over time.If you are considering setting up a business with a partner, it is strongly advisable to have a partnership agreement in place. An agreement will clearly specify the arrangements that you and your partner have mutually agreed upon. There is no formal structure, so you have the freedom to set out whatever you like! And, although it is not a legal requirement, it will help in the avoidance of future disputes as to how the partnership will operate.
As with all partnerships, communication is the key! Before having a partnership agreement made, it is important to discuss the content with your business partner. Although by no means exhaustive, what follows are some of the most common issues a good partnership agreement should cover:
• Name of the partnership.
• Decision-making powers.
• Dispute resolution.
• Contributions to the partnership.
• Management duties.
• Admitting, withdrawal or death of a partner.
• Allocation of profits, losses and draws.
What happens if there is no agreement? Well, in the absence of an agreement, partners are governed by the default provisions outlined in the Partnership Act 1980, which, unfortunately, do not come without disadvantages.
If you would like to find out more, contact Jason Hathaway for a friendly, confidential and impartial discussion.
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The information provided in all of our blogs reflects only a narrative of some elements to consider on the topic. The blogs do not contain considered legal advice and should not be relied upon as advice. Please see our website terms and conditions for full details of our disclaimer. If you are interested in obtaining advice, please contact one of our lawyers who will be happy and able to advise you on your own particular circumstances.