THINKING OF ENTERING INTO BUSINESS AS A PARTNERSHIP BUT DON’T HAVE TIME TO GET A WRITTEN AGREEMENT IN PLACE: THINK
Partnerships are akin to marriages, when things are going well there are likely to be no complaints. However, when things do not live up to a partner’s expectations, business tensions can arise; often resulting in ugly and expensive divorce proceedings for the partnership. Partnerships which are formed without a written agreement are partnerships at will and are governed by the Partnership Act 1890. This means they are regulated by the default provisions of the Act and may find themselves being bound by provisions which they had no intention of having. By way of example, under the Partnership Act all partners are entitled to a share of the profits and debts of the partnership equally; irrelevant of the level of contribution a partner has made to the partnership. Partners may also be jointly and severally liable towards third parties in respect of partnership liabilities.