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.
Further, if the parties decide to depart from the Partnership Act on matters, they can do so by agreement, however unless it is properly recorded there is a risk that you will need to follow the Act. For example, you may be forced to divide profit of the partnership in equal shares even though you thought you had agreed on a different proportion, but this is disputed by the other partner. Therefore, 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. Therefore, usually there is a lot at stake and it is important that, for example, an exit strategy is properly determined and followed. Otherwise you may be alleged to be personally liable for debts incurred by a partnership you were involved in even after the partnership ends.
Our commercial 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:
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Defining roles of each partner;
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How the profits will be distributed;
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How another person may join as a partner;
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How a partner can retire or be removed by the other partners;
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Process to follow when partnership comes to an end
If you require advice on a partnership business arrangement, call us now on (02) 9521 2222 and speak with one of our commercial lawyers. You can also send your enquiry online now and we will call you shortly.