A partnership is a group of two or more people who commence in business with a view to profit. The concept of a partnership is defined in the Partnerships Act 1890 . The main features of the statutory basis are that the partners are jointly and severally liable for the losses and share equally in the profits of the partnership unless they “contract out” of this.
Doing so is not only desirable, but often commercially necessary. Partners may for example, be contributing different amounts of time and skills to the day to day operations of the partnership. Capital may have been provided in different shares too.
If there is no partnership agreement, the default legal position as set out in the preceding paragraph applies. To ensure that the partners manage risk and expectations and regulate shares of income, capital and other benefits, the straight forward course of action is to enter into a partnership agreement.
A partnership is a form of contract binding on the parties. In its simplest form it can deal with profits, capital and parties. In a more developed approach, the agreement can be tailored to suit a wide variety of circumstances. For example:-
- Salaried versus profit shares
- Mixed membership agreements
- Asymetric capital contributions
- Senior and junior partner roles
- Silent partners
- Limited Liability structures
How MTM can help
We have over 25 years experience in legal document drafting for the accounting and business sector. Equipped with our in depth knowledge and client focussed approach, we can quickly identify your requirements and prepare a suitable partnership agreement tailored to your circumstances or requirements.
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