Partnership is defined as the relationship which exists between persons carrying on a business in common with a view to profit. This is quite an embracing definition and it can apply regardless of whether or not the participants consider themselves to be partners and whether or not they have any formal or written partnership agreement to this effect.
This is very important because unless otherwise expressly agreed, partnerships are generally regulated under the Partnership Act of 1890 which in the absence of agreement to the contrary will imply terms into a partnership arrangement.
Clearly this is not a modern statute and many of the provisions which may be implied under the Act, such as those dealing with the sharing of personal liability between the partners for any losses of the partnership and the right of any partner to terminate the partnership on notice, can be inappropriate and damaging to the interests of those operating in a partnership. It is important to note that a partnership is not a separate legal entity and so generally any debts or liabilities of a partnership are the responsibility of all of the partners personally.
A key issue to consider when thinking about setting up a partnership is what the partners are to contribute to the partnership and how any profits or losses should be shared between them, taking into account that a creditor of the partnership will have the right to pursue any partner for all of the partnership debt to the creditor. It is very important to take advice and to put in place an appropriate partnership agreement dealing also with matters such as what happens when partners want to leave the partnership, admitting or removing members of the partnership, decision making and disputes.
An alternative structure which may be considered is the registration and use of a limited liability partnership (LLP). Like a limited company, an LLP is a separate legal person which can own property and contract in its own name. Using an LLP allows the partners generally to limit their personal liability to creditors of the LLP. It is still very advisable to put in place an agreement between the members of the LLP regulating how the LLP is to be operated.
We have considerable experience in preparing partnership agreements and dealing with other aspects of partnership law and particular expertise in the field of medical partnerships.
If you are considering setting up or entering into a partnership agreement and would like legal help or advice, please contact one of our corporate solicitors on 08081668827.
Disclaimer:
Information on this website is provided for general information purposes only. It is not intended to constitute and should not be relied upon as legal advice. There are a number of factors and circumstances which may be relevant to legal advice. The law may also have changed before we are able to update the information on this website. If legal advice is required, please contact us on 08081668827.
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