Partnership Agreements

A partnership is a relationship between two or more persons carrying on a business in common with a view to profit. In New South Wales the relationship of a partnership is governed by the Partnership Act 1892, and whilst the Act will specify some aspects of the partnership, matters that are not in the Act will depend on what the parties decide.

If the parties decide to depart from the Partnership Act on matters, they can do so by agreement, however unless it is properly recorded the partnership may be required to revert to the Act. This may result in you being required to divide profit of the partnership in equal shares even though you thought you had agreed on a different proportion. As can be seen, whilst it is not compulsory, it is prudent to properly have a Partnership Agreement drafted to avoid costly and lengthy disputes that may arise out of the partnership in the future.

A partnership is different from companies in that, if entered into by natural persons, that person will be personally liable for any debts of the partnership. Because personal assets are at stake it is also important that an exit strategy be properly determined and followed when partners leave the partnership. Unless documented properly former partners may be liable for debts incurred by the business after their departure.

Our business lawyers can assist you in advising you on your responsibilities as a partner of a partnership, draft partnership agreements, review and or revise an old partnership agreement, assist in a smooth exit from a partnership, and deal with any disputes that may arise from a partnership.

Our Partnership Agreements will typically cover areas such as:

• Defining roles of each partner;

• How the profits will be distributed;

• How another person may join as a partner;

• How a partner can retire or be removed by the other partners;

• Process to follow when partnership comes to an end

If you require advice on a partnership business arrangement please get in touch with your nearest Prime Lawyers office to see how we can help.

We have business lawyers located at Sydney, Parramatta, Chatswood, Sutherland and Wollongong.