A partnership is automatically created when two or more people set up a business together with a view to making a profit. Without a partnership agreement, the legal terms of a partnership will be governed the Partnership Act 1890.
In order to avoid any complications further down the line, it is recommended to have a partnership agreement as partnership disputes are quite common and a clearly drafted partnership agreement reduces the scope for disputes. Even if a partnership dispute cannot be avoided, costs may be saved if there is a clear agreement in place.
There are two basic types of partnerships, with completely different legal status. These are:-
General Partnerships where the partners remain jointly and individually liable for partnership debts
Limited Liability Partnerships( LLP) created by the Limited Liability Partnership Act 2000. LLPs are essentially a half way house between a company and partnership, and the LLP is a separate legal entity from the partners, although the partners are taxed as individuals as in a partnership. As with partnerships, LLPs should have partners agreements to control the relationships between the members.
An LLP needs to be formally incorporated at Companies House and accounts filed and the LLP’s financial position is therefore available publicly.
Our team of expert partnership law solicitors can advise you on partnership issues generally, partnership disputes, creating or converting to LLP status and drafting partnership agreements.
For further information on the legal aspects of partnership agreements please contact us at firstname.lastname@example.org or call us on (Fulham) Tel. 020 7228 2020 or (Knightsbridge 020 7095 0930.