Partnership Agreement
A partnership will be implied by the law when two or more people are in a business relationship together with the view to making a profit. Where there is no express agreement, the Partnership Act 1890 will imply certain terms into a partnership. It is, however, advisable to have a written Partnership Agreement.
Essentials Elements of a Partnership Agreement
The essential elements of a partnership are:
A formal written partnership agreement may accomplish the following goals:
A silent partner is one who still shares in the profits and losses of the business, but who is uninvolved in its management, and/or whose association with the business is not publicly known; these partners usually provide capital.
As you can see it is folly to operate a business under any partnership basis without an agreement in place. Net Lawman provides you expertly drafted partnership agreements.
Limited Liability Partnership
A limited liability partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liability. It therefore exhibits elements of partnerships and corporations. In an LLP one partner is not responsible or liable for another partner's misconduct or negligence. This is an important difference from that of a limited partnership
In the United Kingdom LLPs are governed by the Limited Liability Partnerships Act 2000 (in Great Britain) and the Limited Liability Partnerships Act (Northern Ireland) 2002 in Northern Ireland. A UK limited liability partnership is a corporate body - that is to say, it has a continuing legal existence independent of its members, as compared to a Partnership which may (in England and Wales, does not) have a legal existence dependent upon its membership.
Difference between Partnership and Limited Liability Partnership
In a traditional partnership, if the business makes losses or is successfully sued, the individual partners are liable; this includes their personal possessions, homes, money etc. An LLP has limited liability, so is much safer for the partners, as they are not personally liable for any losses.
On the other hand, an LLP requires:
Furthermore, general partners have an obligation of strict liability to third parties injured by the Partnership. General partners may have joint liability or joint and several liabilities depending upon circumstances. The liability of limited partners is limited to their investment in the partnership
Disadvantage of Limited Liability Partnership
The only disadvantage is that like a company, the LLP has to be incorporated at Companies House and must file yearly accounts and an annual return with Companies House. The accounts and return are then available for inspection by anyone, so there is a loss of financial privacy
Which is better option?
In general, the LLP seems a better option for most businesses unless you are particularly confident about the risks (of losses or claims) of a traditional partnership or have reservations about revealing your accounts to the public (where your customers and competitors can inspect them).
Unfortunately, this is not a matter for us to consider. It is advisable to seek comprehensive professional advice. Net Lawman shall, however, be happy to discuss your situation with you and recommend you best option subject to your situation.
Net Lawman supply forms for either type of partnership: a traditional Partnership Agreement or a LLP Agreements
Partners are free to agree to any terms they like, provided the terms are not illegal or contrary to public policy. With that in mind, a business partnership agreement includes provisions relating to the following:
Miscellaneous provisions may be included in the business partnership agreement, depending upon the nature of the business and the wishes of the partners. For example, the partners may consider adding a non-compete clause to prevent withdrawing partners from taking unfair advantage of the partnership. The partners may also consider adding provisions for resolving disputes among partners and for methods of partnership accounting and record keeping.
Disputes
If disputes arise between partners in a partnership you need resolution swiftly to avoid matters turning acrimonious and leading to difficulties in the continued running of the partnership business and reputation. Following disputes usually arise:
Net Lawman expert team of Solicitors and Barristers advise both partnerships and individual partners on disputes and what can be done about them.
Net Lawman documents are up-to-date in simple plain English with explanatory notes.