If you have entered into business with a partner, you may be concerned about formalising your arrangements for such a partnership. Each business is unique and each partnership requires an agreement tailored to the arrangements agreed between partners to ensure the smooth running of your business and straightforward resolutions of partnership problems should the arise. Our team are experts in drafting and advising on partnership agreements and can help support your business needs. Contact us today to find out how we can help you and your business.
Do I need a partnership agreement?
If you do not have a partnership agreement, your partnership will be subject to the rules of the Partnership Act 1890. This act regulates all partnerships unless all partners of the business have agreed in writing that it should not. Having your modern day business regulated by a law drawn up in 1890 may not suit your needs or reflect the realities of your business and as a result, it is always best to have a partnership agreement drawn up that is specifically designed to work for you and your partnership.
In addition, the Partnership Act provides that partnerships can be brought to an end simply by giving notice, even verbally. This means that if a partner wishes to end the business all they have to do is tell you and your business may be dissolved. This does not provide you with the security of a legal document outlining the circumstances under which your partnership may be brought to an end. On the other hand, a partnership agreement allows you to agree with your partner(s) how much notice is required to bring the partnership to an end and also outline whether only certain partners can bring the partnership to an end. This gives you far greater protection over your business and associated assets. In addition, a partnership agreement also gives you flexibility where you feel the partnership is no longer working and you need to get rid of a partner. Under the partnership act, the business would need to be dissolved in order to expel one of the partners – this does not reflect the needs of modern-day businesses.
What are the advantages of having a partnership agreement?
Whilst the disadvantages of not having a partnership agreement are quite apparent, there are numerous distinct advantages to formally setting out how your business will function.
Firstly, having a partnership agreement in place demonstrates your commitment to your business partner and to growing your business. A partnership agreement also allows you to control the terms under which any of the partners may leave the business and when the partnership can be dissolved. Moreover, you can protect the longevity of the partnership by including a clause to expel difficult members. A Partnership Agreement may also have positive implications externally such as allowing you to obtain finance more easily – it shows financial institutions that you are serious about your business.
Contact BBM Partnership Agreement Lawyers
If you require advice or drafting services in relation to a partnership agreement or for any other aspect of your business, contact us today.
BBM advise a wide range of Businesses who have interests in Scotland. From our offices in Edinburgh & Wick we serve clients in Midlothian, Caithness, Aberdeen, the Highlands and throughout Scotland.
We are told that what makes us different is our effort to go the extra mile in getting to know and understand our clients’ business. Clients value our honesty – we tell it how it is.
For more information or for advice call us: Edinburgh 0131 526 3280 Wick 01955 604188