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Stephensons' commercial solicitors can advise on all aspects of partnerships and limited liability partnerships including formation, conversion, disputes and termination and drafting of the necessary agreements. In recent years, an increasing number of organisations have been converting or setting up as limited liability partnership (LLPs).
An LLP shares many of the features of a normal partnership but it also offers reduced personal responsibility for business debts. Unlike partners of ordinary partnerships, the LLP itself primarily is responsible for any liabilities that it runs up as it is a separate legal entity (and not the individual partners). There are certain default provisions of the Limited Liability Partnership Act 2000 that will apply to the LLP if you do not have an agreement in place. If you do not wish to rely on these then it is vital for you to have an agreement to govern the relationship between the members (a Members Agreement).
We offer partnership agreements for small businesses as well as for medium and large organisations. Whether you are looking to draft a new partnership agreement or need legal advice on an existing one, then contact our specialist solicitors today.
A partnership agreement is a written agreement between two or more individuals who join as partners to form and carry on a for-profit business. The Agreement will state the nature of the business, the capital contributed by each partner, each partner’s rights and responsibilities.
A partnership can either be set up as a traditional partnership or a limited liability partnership.
A traditional partnership does not have a separate legal existence like an incorporated firm, and the partners are jointly and severally liable for the debts of the company. Even on withdrawing from the partnership the partners remain liable for already incurred debts and even for future debts unless their departure is correctly documented.
The partners in a limited liability partnership aren’t personally liable for debts the business can’t pay. Their liability is limited to the amount of money they invest in the business.
Limited liability partnerships are most often set up by professional services firms, like solicitors or accountants.
Unlike a traditional partnership the duty of good faith is not implied into a limited liability partnership and so it is essential that a partnership agreement is entered into to govern the conduct of the partners towards each other.
All partnerships require a partnership agreement, sometimes referred to as a ‘partnership deed’. A partnership agreement is required to allow the partnership to expel partners, to ensure that partners fulfil their agreed obligations and to control the distribution of profits.
Partnership agreements are essential. In the absence of a partnership agreement, there is much potential for dispute and disagreement between the partners. Planning ahead avoids disputes and costly court battles later. No matter how much of a friend your potential partner is, you should never enter a business partnership with him or her without a formally drawn up partnership agreement.
In some instances, it may have been a few years since you had a partnership agreement drawn up and legislation may have moved on. We can review your agreement and update it where required and advise you (in conjunction with your accountant) and the best legal structure for your business.
A definitive partnership or limited liability partnership agreement is vital to the smooth running of any business. It also facilitates business continuity in times of dispute.
While not legally required, it is strongly advisable to consult a solicitor for a partnership agreement. A solicitor can help draft a clear and legally sound agreement that protects your interests and minimises potential disputes, providing valuable legal expertise and peace of mind.
A partnership agreement is typically written by the partners themselves with the assistance of a solicitor. It outlines the terms, responsibilities, and expectations of the partnership, covering aspects such as profit sharing, decision-making, and dispute resolution.
In the absence of a partnership agreement, the rules governing the partnership are generally governed by the Partnership Act 1890 (in the UK). Some key rules include:
It's crucial to consult with our partnership agreement solicitors to understand how these default rules may apply to your specific situation and to consider creating a custom partnership agreement to tailor the arrangement to your needs.
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