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