Partnerships

Many business concerns are run as Partnerships, often by family members or friends, rather than as Limited Companies.

When people set up a Limited Company they appreciate that they need to have documents prepared for them. Those include a Memorandum of Agreement and Articles of Association, which are basic requirements. They are often advised to have a Shareholders' Agreement so as to better clarify the rights of Shareholders as against each other.

However, when someone proposes to set up in Partnership, they do not always appreciate that a Partnership Agreement should be drawn up, preferably in advance. After all, whether people have been brought together to pursue a business venture through being family or friends, it is better to ensure that what they thought they had agreed upon originally is written down for them at the time. An experienced Partnership lawyer would point out to them other important matters which they should consider as well.

When a problem has occurred and resulting stresses already exist between Partners, it is much more difficult for Partners to agree what they had supposedly originally agreed and it is understandably even more difficult to agree something which had never been discussed originally! Indeed, it might already be "too late" and matters may spiral out of control with a rather depressing inevitability.

A Partnership Agreement is able to be as short or as long as the parties might wish and it is rather like an insurance policy. One hopes never to refer to it because if there is a need trouble may already be looming...!

Whether you are thinking of setting up in Partnership or already have an existing Partnership, you should have a Partnership Agreement prepared by someone who is well versed in the complicated area of Partnership Law. Also, you might wish to learn about the new opportunity of having a Limited Liability Partnership. It is different from trading either through a Limited Liability Company or as a Partnership (which has unlimited liability for the Partners).