Professional Partnership Agreement Solicitors
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What is a partnership agreement?
A Partnership Agreement is a written agreement between two or more individuals who wish to go into business together with the intention of making a profit. This is an essential step when venturing into business with others, as disputes and circumstantial changes can massively impact a business. Having a Partnership Agreement is the only way to ensure the business and the individuals involved are protected.
What’s included in a partnership agreement?
A commercial partnership agreement is a critical document designed to set clear terms between you and your business partners. This agreement typically includes essential information about each partner’s contributions to the business, including initial capital, assets, or services, as well as the specific roles and responsibilities each partner will hold within the business. By defining these upfront, we can prevent misunderstandings about each partner’s obligations.
Another key aspect is the allocation of profits and losses. We outline how income and losses will be divided among partners, often in proportion to each partner’s contribution or as agreed upon by all partners. This section can also cover any agreed partner salaries or drawings to ensure smooth cash flow and prevent conflicts over financial matters.
The agreement also addresses the decision-making process, including voting rights and authority limits, helping to prevent deadlocks in decision-making. Finally, it will cover the procedures for introducing new partners, the terms under which a partner may leave, and how to handle dissolution if the partnership comes to an end. These sections are essential to protect the partnership’s continuity and ensure a smooth transition should any changes occur within the team.
How can our Commercial Law Solicitors help?
When entering into a business partnership, specific terms and conditions of the relationship between the partners must be clearly established. It is essential that you seek legal advice with a view to having a proper Partnership Agreement prepared. The agreement will allow each of the partners to manage the business according to agreed objectives and clarify at the outset the rights and obligations of the partners, including the financial contribution required from them.
A Partnership Agreement will provide a mechanism for:
- Protecting assets
- Distributing profits
- Determining the outcome of the death of a partner/if a partner chooses to leave
- Setting out how disputes will be resolved.
Morecrofts’ specialist team of commercial law solicitors can advise you on the best possible way of achieving a successful partnership. We can assist with producing an agreement that ensures your partnership is effective from its early stages, and address issues that may arise during the lifetime of the business. Email our team directly at BusinessTeam@morecrofts.co.uk
How to set up a partnership agreement?
Setting up a partnership agreement involves a few essential steps to ensure the terms are clear, comprehensive, and legally binding. We’ll start with a detailed consultation where we discuss your business goals, the roles and contributions of each partner, and any specific terms you want included, such as profit-sharing ratios, capital contributions, and operational responsibilities. This conversation helps us to tailor the agreement to meet everyone’s expectations.
Once we have a clear understanding, we’ll draft the agreement with sections covering key areas like financial arrangements, decision-making processes, and partner roles. We’ll also address potential issues like dispute resolution, exit procedures, and what will happen if a partner wishes to retire or is asked to leave or if the partnership needs to dissolve. These provisions not only protect each partner but also provide a solid framework for the business as it grows and evolves.
After drafting, we review the document together, making adjustments to ensure every partner fully understands and agrees with the terms. We then handle the formalities of signing the agreement, ensuring it is legally binding. While the agreement is now ready to support your business, we can also assist in future amendments if circumstances change, helping keep your partnership secure and adaptable.
How much does a Partnership Agreement cost?
The cost of drafting a commercial partnership agreement varies depending on the complexity of your business. For a straightforward partnership, where the terms are relatively simple, fees generally start from around £1,500 plus VAT. This would typically include a consultation to understand your needs, drafting a basic agreement, and ensuring that it meets standard requirements.
However, if your business has specific requirements—such as complex profit-sharing structures, multiple partners, or detailed clauses around decision-making and exit strategies—then the cost may range from £3,000 to £5,000 plus VAT. This reflects the additional time and care needed to draft provisions that are tailored to protect the interests of each partner and the business.
It’s also worth considering that an investment in a well-crafted partnership agreement can save substantial costs in the long term by helping to prevent disputes. We can discuss flexible payment options that align with your budget while providing a high standard of legal support.