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The Partnership Agreement or Deed

The central feature of a partnership is mutual trust and confidence between partners. This is not a concept which easily lends itself to expression in a deed, or enforcement when it is absent.

The main reasons for a deed are:

  • When a deed doesn’t exist it is difficult to know what the agreements are, particularly in the situation of dissolution or entry or exit of a partner
  • The limitation of the Partnership Act
  • It provides partners with the equivalent of, and the advantages of, an employment contract
  • Provides the basis of entry for future partners

The deed may take many forms, the following provides the list of matters which need to be addressed
and perhaps included:

  • Effective date
  • Firm name and location
  • Period of the partnership
  • Partnership capital
  • Share in profit and loss
  • Holidays
  • Restriction on partners to undertake activities in other businesses
  • Any other restrictions on partners
  • Retirement provisions
  • Insurances:
    • life
    • accident and sickness
    • professional indemnity
  • Winding up the firm
  • Service entities
  • Arbitration
  • Levels of expectation of partners
  • Partner performance management
  • Decision making
  • meetings:
  • formal
  • informal
  • social
  • Voting rights:
  • ordinary resolutions
  • special resolutions
  • Arbitration
  • Management structure
  • Powers of the Board / Management Committee
  • Role, responsibilities and authorities of chairman / managing partner / senior partner / department heads / partners