What is a partnership deed?
A partnership deed is another name for a partnership agreement, and sets out the terms and conditions of a partnership. This legal document can be drawn up between those entering into a general, limited, or limited liability partnership.
Why do you need a partnership deed?
Without a partnership deed in place, general partnerships will be bound by the 1890 Partnership Act. The terms of this act are not always suited to the needs of a modern business. For example, the expulsion of a partner for misconduct or retirement of a partner is impossible, and if a partner dies the business usually has to be dissolved.
What to include in a partnership deed:
- How much capital and work each partner will contribute
- The sharing of partnership profits and payment of any salaried partners
- The nominated partner who will handle tax and records
- The working hours and holidays for partners
- Any restrictions on partners to prevent conflict of interest
- Provision for the retirement, insolvency, misconduct or death of a partner
- Whether new partners can be admitted and the procedure for this
- Provision for arbitration if any partnership dispute should arise
- What will happen in the event of partnership dissolution
Clearly the 1890 Act leaves something to be desired in terms of protecting your business. Furthermore every partnership is different, so the one-size fits all approach of a partnership deed template simply won’t do. We always advise anybody thinking of entering a partnership to ensure a bespoke partnership deed is drawn up by an experienced legal professional.
Help writing your partnership deeds from Ralli
The specialist partnership law solicitors at Ralli can help in the formation of a watertight partnership deed that protects the interests of you and your business. We can also advise on any disputes or problems arising within a partnership, and assist in resolution whether or not a deed is in place. Contact us on 0161 832 6131 for further information.Back to our services