Partnership Agreements
A partnership is defined in the Partnership Act 1892 (NSW) as “the relation which exists between persons carrying on a business in common with a view of profit”.
Advantages of having a partnership, in addition to having additional business owner/s to bounce ideas off and share the workload, can include the fact that there is virtually no cost to establish it, little external regulation and very little paperwork involved.
Disadvantages include unlimited joint and several liability, a maximum of 20 business owners, liability for the acts and omissions of partners and risk of disagreement between partners.
Although the Act does govern some aspects of the partnership relationship, a Partnership Agreement can be invaluable when there is a difference of opinion or the relationship between partners breaks down as often happens.
A Partnership Agreement can cover:
- the business name the partners will trade under
- the agreed business activities of the partnership
- how the partnership will be managed (regular meetings, duties and responsibilities)
- contributions to the partnership and the agreed partnership percentage/split (and hence how profits and losses are shared)
- how the respective interests in the partnership are valued
- retirement, death and expulsion of partners (and if and how new partners can be introduced)
- whether any post-partnership restraints apply
- agreed dispute resolution mechanisms
Partnership Agreements can be simply drafted to cover common situations or be specifically tailored to your specific your business.
FURTHER INFORMATION
For further information, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au
This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.
