Partnership Agreements

At Clough & Willis, we support clients across the UK in drafting, reviewing and advising on partnership agreements tailored to the unique needs of their business. Whether you are forming a general partnership, a limited partnership or a limited liability partnership, a well-drafted partnership agreement protects your business operations, offers certainty for the partners involved and limits the risk of future disputes. Our commercial solicitors have significant experience supporting small businesses and professional partnerships with formal partnership agreements that are legally enforceable and commercially appropriate.

Without a written agreement in place, your partnership will be governed by the default provisions of the Partnership Act 1890. These can lead to unintended consequences, such as all partners being equally liable, profits being shared equally regardless of input or the partnership being automatically dissolved when one partner leaves. Our role is to help you avoid these risks by putting in place a comprehensive partnership agreement that reflects your intentions.

For legal advice on a partnership agreement that protects your business and defines your rights clearly, contact Clough & Willis Solicitors today. Call us on 0800 083 0815 or use our online enquiry form​​​ to request a call back.

What Is a Partnership Agreement?

A partnership agreement is a legally binding contract that governs how a business relationship between two or more individuals or entities running a business together will operate. It includes rules about profit sharing, capital contributions, day-to-day management, dispute resolution, and partner responsibilities. A partnership agreement can also define ownership percentages, set out procedures for admitting new partners and outline terms for a partner’s withdrawal.

The agreement will typically cover banking arrangements, decision-making processes, and what happens in the event of death, retirement or disputes between the partners. It provides clarity and legal protection for all parties involved.

Who Should Use a Partnership Agreement?

A partnership agreement is suitable for any business with two or more individuals or entities working together with a view to profit. This includes:

• General partnerships
• Limited partnerships
• Limited liability partnerships
• Professional service firms such as accountants, architects or solicitors
• Small businesses operating under a partnership structure
• Corporate partners entering joint ventures with individuals or other businesses

Even if a partnership has been operating informally for years, putting a formal agreement in place will ensure clarity and help avoid future misunderstandings or disputes.

Is it a Legal Requirement to Have a Partnership Agreement?

There is no legal requirement to have a partnership agreement. However, in the absence of a formal arrangement, your partnership will be governed by the default rules set out in the Partnership Act 1890. These default provisions apply regardless of your intentions and may not reflect how you actually want your business to operate.

For example, under this act, all partners are equally liable and share profits equally, regardless of their capital contributions or the amount of work they perform. There is also no automatic right to expel a partner or restrict them from competing with the business after departure. The partnership may also automatically dissolve if one partner leaves or dies, even if the remaining partner or partners wish to carry on.

Having a formal partnership agreement in place allows you to define your own rules for managing the business, resolving disputes and protecting your interests. Setting these rules now, and having them reviewed regularly by a legal professional, will help you avoid strained relationships in the future. It also supports continuity, reduces legal risk and makes it easier to deal with investors, banks or Companies House when formal documentation is required.

Elements of a Partnership Agreement

While every agreement is different, a comprehensive partnership agreement typically includes provisions on:

• The capital contributions that each partner is investing
• How you will make major decisions, and whether unanimous consent will be required
• Ownership percentages and voting rights
• Profit-sharing arrangements and loss distribution
• Day-to-day management and decision-making authority
• Roles and responsibilities of individual partners
• Terms for admitting new partners
• How you deal with a partner’s withdrawal, retirement or expulsion
• Banking arrangements and financial controls
• Dispute resolution mechanisms
• Non-compete clauses
• Dissolution provisions and continuity planning
• Agreement review procedures

A well-drafted partnership agreement gives your business a clear structure and helps prevent individual partners from making decisions that go against the interests of the wider partnership.

How We Can Help

At Clough & Willis, we offer practical legal advice to help you draft or review a partnership agreement that works for your business. Our commercial solicitors based in Bury support businesses all across the North West. We will work closely with you to understand your objectives, protect your position and address any concerns.

We work with partnerships across a wide range of sectors and at every stage of development - from newly formed ventures to established businesses looking to formalise their arrangements. As a full service law firm, we also provide access to specialists in dispute resolution, employment and commercial property to support all areas of your business operations.

Whether you are looking to set up a new partnership, resolve issues with existing partners or amend your current agreement, our legal experts are here to guide you through the process from start to finish.