1. The need for a Partnership Agreement
A partnership agreement is something which binds two or more partners together in a business and outlines what is expected of each one and what happens if something happens in the business.
A written partnership agreement is a protection tool for any business which is not a company and has individuals as partners within it.
Such agreements are a contract between partners in the business which sets out the terms and conditions of this relationship between the partners in business.
In a partnership agreement you can have agreements included on the percentage of ownership, description of manage powers, the term of the partnership and how it can terminate if required.
Within a partnership agreement you can also expect to have in it the distribution of profits, whether this is an equal share or a different share for each partner and also the duties of each partner for the business, such as one could be responsible for marketing whilst the other is responsible for the production of goods etc.
We advise that a partnership agreement should be entered into right at the start of any business as once your business has started it could be prove difficult to have the other partner(s) change what is expected of them if it is not written into the agreement right from the offset.
Partnership Agreements for small to medium sized businesses can help in the business growth as each partner will be aware of their responsibilities and what they need to put into the business for it to succeed, it will also clarify what can happen when there is a dispute between the partners, so nothing is left out to be vague.
It is important to note that if you do not have a partnership agreement then your business will be governed by the Partnership Act 1890 from which the provisions most likely would not be suitable for you as you cannot expel a partner but can only end the partnership, the acts and decisions of all partners are binding on the firm. All the partners are jointly liable for the debts or wrongful acts of anything partner acting in the course of business and all partners may have an equal say in the business creating long and unwanted lengthy unresolved disputes.
2. Advice and Preparation of a Partnership Agreement
At NIDO we have experience in preparing Partnership Agreements for small to medium sized businesses. At NIDO we have assisted partners in business who need agreements to cover a vast array of circumstances and situations.
We have assisted people in setting up the role and responsibilities for each partner and described within the agreement how decisions are made, what the responsibilities are for individually named partners and how could these roles and responsibilities change.
In addition to the above we have also helped our clients with setting out how to deal with a change in the partnership if for example a partner leaves, becomes incompetent, gets divorced, dies or become subject to financial difficulties.
Partnership Agreements can also have included in them things such as how often are meetings required, employment issues such as holidays, benefits, maternity leave etc and as importantly things such as confidentiality restrictions on the partners within the business if you do not want your knowledge shared in the event one partner leaves.
Our lawyers at NIDO have extensive experience in assisting many businesses in the UK for a wide array of reasons and one of these is providing assistance with Partnership Agreements.
At NIDO, our experienced lawyers can confidently assist you in dealing with your requirements should you need to have a Partnership Agreement to ensure the smooth operation of your business.