A trader who carries on business within a partnership is an agent of the firm, and of his or her other partners.
Partners in a partnership are jointly liable with other partners for all business debts and obligations incurred by any partner, while he or she is a partner.
He or she is also jointly and severally liable with the other partners for loss or damage to third parties occasioned by the wrongful acts or omissions of any of his or her partners in the ordinary course of the partnership business (unless he or she lacked the necessary authority and the third party is aware of this).
Generally speaking, in a partnership, a partner's liability will continue after his or her retirement for matters which arose prior to it.
In the absence of the consent of all of the partners (whether express or inferred from a course of dealing) to the contrary, a partnership will be governed by the provisions of the Partnership Act 1890.
It is usual for partners to enter into a partnership agreement rather than rely on the provisions of the Act (under which, for example, a partnership may be 'at will', so that any partner may terminate it, without notice, at any time).
Partners are taxed on the same basis as sole traders.
Partnerships can largely be governed by contract and it is therefore in the interests of the partners that there be agreement on the principal issues that will or might affect the business. A partnership agreement generally includes:
- Nature of business
- Name of partnership
- Bank arrangements
- Current accounts
- Profits and losses
- Partners obligations
- Limitations on partners authority
- Restrictions on an outgoing partner
We would be happy to assist you in preparing a suitable form of partnership agreement.