Partnership

A partnership is defined as the relationship existing between two or more persons who join to carry on business with a view of profit.  A partnership is an unincorporated body.  In the context of legal services, when we deal with a partnership the chances are that we are either going to be asked to draw up a partnership agreement or act in a partnership dispute.

Partnership Agreements

It is perfectly possible for a business to survive and thrive without a partnership agreement.  Indeed, the most important aspect of any partnership is the relationship between the partners and their trust and confidence in each other.  A partnership agreement wont hold together trust and confidence between parties.  What it will do is give a sense of security to the business and more certainty to the legal relationship..  For example, a partnership can be brought to an end at any time.  You can change that by agreeing a term for the length or the partnership in the written agreement or you can state a minimum notice period that a partner has to give if he wants to leave it.  Even if a partnership runs successfully for some time, it can still be hit through nobody's fault by death or critical illness.  A partnership agreement, sometimes with the addition of appropriate insurance can also make provision for those events. 

You can decide what to put in the partnership agreement.  No two partnership agreements need be the same.  Indeed, they should be tailored appropriately to meet your circumstances.  To help you think about and decide what you want in a partnership agreement, you can access a checklist by clicking here.

Partnerships in businesses being run as a company

As stated above, a partnership in the strict sense is one which is unincorporated (unless it is a limited liability partnership).  However, it is perfectly possible for two or more people to be "in partnership" running a company.  A company is a separate person in law in the sense that it can make its own contracts, own property and be prosecuted for criminal offences without the individuals behind a company being responsible.  However, it is often the case that companies are run by people who have their own separate legal relationship to each other as partners.  It is perfectly possible to regulate that legal relationship and plan for the future or unfortunate events by drawing up appropriate shareholder agreements and amending (where appropriate) the Company's constitution (the Articles of Association).